HomeMy WebLinkAboutQuarterly Graphics 3
CITY PORTFOLIO COMPOSITION
PAST FOUR QUARTERS 2004-05
100%
90%
80%
70%
60%
10%
50%
40%
30%
20%
0%
3/3112005 6130/2005 9130/2005
41% 31% 33%
20% 22% 26%
40% 47% 42%
0% 0% 0%
o Investment pools 34%
OGD's 19%
.U.S. Agencies 48%
o U.S. Treasuries 0%
Anticipated investment conditions
During the October-December 2005 quarter, $5 million of agencies will mature, as will $2
million in TexasTERM holdings and $7.5 million in certificates of deposit. Scott McIntyre of
First Southwest Asset Management writes that the bond market has priced in three more 25 basis
point rate hikes by the Fed. If these increases are made as expected, overnight rates could be at
4.50% on February 1,2006. He notes, "the economy is in an odd position with opposing forces
arguing for both accelerating and decelerating growth. . . current market levels appear fairly
priced as a hedge against the next whip saw change in market psychology."
As in last quarter's report, the expectation of rising rates suggests that any new City investment
should stay short term, so that maturing funds may be reinvested at higher rates. Jeff Flynn of
TRACS Investments advises remaining in an all pool and 90 day agency discount note rollover
mode for any new investments. City staff will continue to keep pool balances and short-term
agency holdings as the majority of the portfolio while rates continue their expected rise. Staff
will likely concentrate on purchasing investments for terms of six months or less during the
quarter.
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