A Big Week for the Bond Market
It is a big week for the bond market with a slew of economic releases (jobs, consumer confidence and a few inflation measures), the Federal Open Market Committee meeting (Tuesday/Wednesday) and investors desperately seeking direction. Public sector investors have a constrained universe: they do not generally invest in equities (though a few do), and their […]
The Little Engine that Couldn’t: The Demise of BSBY
The details. After the Great Recession regulators determined to replace LIBOR as the dominant index to link floating rate securities. LIBOR was meant to represent the rate on unsecured obligations (commercial paper, corporate notes, bank loans, etc.) It had grown over its 40-year life to be the dominant market index, and as such had great […]
Fair Weather: Public Funds Investors Are Well-Positioned to Meet Investment Expectations
The accompanying chart of recent moves in yields speaks volumes about the current market environment and its implications for public funds investors. Since the year began short-term money market rates have been at or near their generation highs. And they have barely noticed the big moves in market sentiment. LGIP rates, as measured by the […]
First Quarter Investment Returns: Cash Led the Way Again
• Local government investment pools and money funds once again produced market-leading returns in the 2024 first quarter. The beat by cash-type investments followed the strong showing for cash-type investments in 2023. • Returns of longer-duration portfolios were dragged down by a modest rise in interest rates. • The yield curve also worked against longer-duration […]
Public Sector Investment Assets Grew Strongly Last Year, Providing a Budget Cushion for States and Localities
The details. Investment assets grew by 7.5% last year, propelled by strong state and local tax collections, budget surpluses and investment earnings at rates that finished the year at their highest levels in a generation. The growth came after two years, 2020 and 2021, where Covid relief funds swelled state and local budgets. In that […]
Prime Money Funds: How Changes Could Affect Public Funds Investors
Plans by a little-known money market fund to alter its investment strategy could be a harbinger of changes to the industry that have significant implications for public funds investors. The implications are three-fold: 1) state and local governments invest in money funds directly and some local government investment pools (LGIPs) invest in them as well, […]
Recent Market Moves, LGIP Legislation in Nebraska and More. . .
This week’s Beyond the News has commentary on recent market moves, proposed local government investment pool legislation in Nebraska and a capital raise by Public Trust Advisors. Check out the updated Dashboard here. Recent Market Moves Have Had Almost No Effect on LGIP Yields The bond market has had a bumpy couple of months. Two […]
2024 Investment Environment: Treasuries on Top
The year begins with a fresh look at the public funds investment universe. Since most public sector investment policies limit investments by maturity and quality we focus on the universe of high-quality investment grade securities with maturities of three years or less. Excluded are foreign-issued securities and corporate bonds rated less than A. The big […]
And the Winner Is?
A Recap of 2023 Investment Results The PFII Dashboard has been updated. See it here. The sharp rise in rates over the year just ended resulted in strong returns for LGIPs and money funds. We estimate that the full year returns for LGIPS were in the range of 5.10% to 5.30%. (The lack of consistent […]
Big Market Move Means Different Things for Different Folks
The big market news last week was a strong rally that pushed most interest rates down by 30-40 basis points. To see what it meant for public fund investors, check out the updated Dashboard. Here are highlights: ● The market rally, which pushed down interest rates of most tenors by about 30 basis points, […]