September 2018 TPIF

Treasurer’s Pooled Investment Fund

Quarterly Commentary

Higher Rates Begin to Sting

We are proud to announce that we are unveiling a new, more interactive way to read the monthly Treasurer’s Pooled Investment Fund (TPIF) report. Follow the link on the Treasurer’s website to see it for yourself. We hope you enjoy. This month, the stock market and the economy continued to show resilience in the face of the US-China trade war and some turbulence in domestic politics. The Federal Reserve (FED) hiked short-term interest rates as expected and the S&P 500 reached another record-high of 2,930. Fitch has once again affirmed the TPIF’s AAA rating, Fitch’s highest possible rating. On September 24, the U.S. implement- ed another round of tariffs on imports from China, a 10 percent tax on $200bn worth of Chinese imports; this is on top of the $50bn worth already taxed earlier this year. China immediately retaliated with 5 to 10 percent tariffs on $60bn worth of U.S. goods. Emerging market fears over Brazil, Ar- gentina, Turkey, and South Africa contin- ue this month; however, the U.S. equity market continues to strengthen.

Despite the trade war between the world’s two largest economies, the U.S. economy is coasting into its tenth consec- utive year of expansion. In recent months, job gains have been strong, the unem- ployment rate has remained low and measures of inflation have been in-line with the FED’s long-term goal. Improving consumer confidence, strong retail sales and steady household spending are signs that the economy should continue on its path for at least the short-term. Citing a strong job market and stable inflation during their September 26 meet- ing, the Federal Open Market Committee (FOMC) raised the target range for the federal funds rate from 1.75–2.00% to 2.00 –2.25%. This rate hike marks the third of the calendar year, sixth since 2017, and brings FED funds within 75 basis points of its projected neutral FED funds rate of 3.00%. Reaching the FED’s neutral rate increases the chances for the end of the FED’s current rate hike cycle. The housing sector remains strong, evidenced by the annual growth in house prices remaining above 6 percent since October 2017. However, there have been

some early signs of the housing market beginning to cool off, such as recent downward trends in house price indices, housing starts, construction permits for new houses, new home sales, and lumber prices. September saw steady increases in intermediate Treasury yields. The 2-year yield started the month at 2.63% and rose to finish at 2.82% and the 5-year yield started the month at 2.74% and rose to finish at 2.96%. The Treasury curve steep- ened slightly, with the 2-year-to-5-year spread starting the month at +11 and rising to finish the month at +14. General- ly, curve steepening is a sign of investors’ confidence that the economy is strength- ening and that the risk of inflation is in- creasing. In the face of negative headlines, in- vestors continue to drive stock prices and bond yields higher. Thanks to these higher yields in the fixed income market, our TPIF yield now exceeds 2.00% for the first time since 2009!

Jon Christensen Treasurer-Tax Collector

Treasurer’s Statement

Capital Markets Team

The Treasurer’s Pooled Investment Fund is comprised of contributions from the county,

Jon Christensen Treasurer-Tax Collector

schools, special districts, and other discretionary depositors throughout the County of Riverside.

The primary objective of the treasurer shall be to safeguard the principal of the funds under the

Giovane Pizano Chief Investment Manager

treasurer's control, meet the liquidity needs of the depositor, and to maximize a return on the

funds within the given parameters.

Steve Faeth Sr. Investment Manager

The Treasurer-Tax Collector and the Capital Markets team are committed to maintaining

the highest credit ratings. The Treasurer’s Pooled Investment Fund is currently rated Aaa-bf by

Isela Licea Assistant Investment Manager

Moody’s Investor Service and AAAf/S1 by Fitch Ratings, two of the nation’s most trusted bond

credit rating services.

Jake Nieto Administrative Services Assistant

Since its inception, the Treasurer’s Pooled Investment Fund has been in full compliance

with the Treasurer’s Statement of Investment Policy, which is more restrictive than California

Government Code 53646.

6-Month Pool Performance

Month End Market Value ($)*

Month End Book Value ($)

Paper Gain or Loss ($)

Paper Gain or Loss (%)

Book Yield (%)

WAM (Yrs)


6,010,617,673.04 6,046,972,952.10 (36,355,279.06)





5,911,098,915.70 5,941,969,016.43 (30,870,100.73)





5,978,974,759.31 6,015,426,250.42 (36,451,491.11)





6,488,967,672.40 6,525,613,476.09 (36,645,803.69)





7,108,808,189.85 7,140,053,875.23 (31,245,685.38)





7,705,324,013.51 7,744,877,200.23 (39,553,186.72)




*Market values do not include accrued interest.



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