Public Funds Investment Portfolios: Steady with Little Growth Expected
Public funds investment assets have barely expanded this year, despite robust interest earnings that flow to investment portfolios. This is according to newly released Federal Reserve data. The Fed reports that investment assets totaled $3.7 trillion at the end of the third quarter, up $100 billion from December 31, 2022. The growth rate of 2.9% for the nine-month period is less than the pace of economic growth (GDP was up 4.5%) and about even with the rate of inflation. This followed growth of investment assets of 40% between 2018 and the end of 2021.
Moody’s Makes it Three
Late last week Moody’s Investors Service announced a change in the outlook on US government ratings to negative from stable. This signals that the triple-A rating of United States debt could be lost in coming months.
Recent Moves by LGIP and Money Fund Managers Support View that Fed is Nearly Done Tightening
Money market fund and local government investment pool managers have been re- positioning portfolios on the assumption that the Federal Reserve is near the end of its tightening cycle. The moves have taken place incrementally over the past several months as the “nearly done” mantra suffused the market.