July 2010 UPDATE Newsletter
Thursday, July 15, 2010 in Monthly Newsletters
Issued July 2010
OUTSTANDING JUNE PERFORMANCE
IMET's 1-3 Year Fund performed exceptionally well during the month of June, providing a net return of .43 percent for the month (5.16 percent annualized) and a net 2.43 percent for the past 12 months.
Several factors contributed to the strong June performance. Worries about global growth still abound, consumer confidence is down and the jobs data remains disappointing, perpetuating the flight to quality. We saw 2 Year Treasury notes fall to 0.59 percent, the lowest ever on intraday trading and closing at just .60 percent. . The 2 Year Treasury yield has fluctuated since December 2008, (the last yield this low) going as high as 1.31 percent last summer when investors started pricing in rate hikes that never materialized.
10 Year Treasury yields are also down, closing at 2.96 percent. However, they touched 2.95 percent, the lowest since April 2009. 30 Year Treasury yields also declined, closing at 3.94 percent. 30 Year yields had not closed below 4.0 percent since October 2009.
The spread between the 2 Year and 10 Year Treasury yields narrowed to 236 bps, the smallest difference since October, flattening the yield curve and opening the door to bring 10 Year yields down to 2.75 percent.
IMET CONVENIENCE FUND OUTPERFORMS COMPETITION
IMET's Convenience Fund (CVF) continues to lead the way in short-term LGIP returns. The average daily yield for June 2010 was .30 percent, outperforming other pools in Illinois by 14 - 28 bps. The CVF posted a one-year yield of .52 percent.
The Fed Funds target rate remains at 0 to 0.25 percent. The statement after the June 22-23 FOMC meeting said the economic recovery is ‘proceeding', not strengthening, as they had said in April. They reiterated they will keep rates exceptionally low for an extended period. "Financial conditions have become less supportive of economic growth on balance largely reflecting developments abroad." The European debt crisis is impacting the recovery negatively.
The IMET CVF current rate is a blended rate consisting of the Fed Funds rate and a fixed income rate, with a minimum rate guarantee through December 31, 2010 equal to the Fed Funds rate. It offers daily liquidity and remains a very good investment option for a diverse investment portfolio providing members with safety, liquidity, and yield.
September 12-14 - IGFOA Conference - Champaign, IL
September 23-25 - IML Conference - Chicago Hilton Hotel
GOVERNOR SIGNS HB 4945 - JOINT INVESTMENTS
On July 2, 2010, Governor Quinn signed HB 4945 amending the Local Government Debt Reform Act. (Public Act 096-0964). The amendment became effective immediately. The Act allows governmental units to authorize the treasurer of any governmental unit to "join with the treasurers of other governmental units for the purpose of jointly investing the funds of which the treasurer has custody." The amendment provides explicit authority where before the authority existed implicitly, in addition to the authority granted by the Constitution of the State of Illinois and the Intergovernmental Cooperation Act along with the Illinois Municipal Code.
AUDIT CONFIRMATION REQUESTS
Please send all audit confirmation requests to:
Ms. Paula Cooper
PMA Financial Network, Inc.
2135 CityGate Lane - 7th Floor
Naperville, IL 60563
Or Fax requests to: 630-718 8701
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