July 2016                                                                                                                                                         Volume 12 - Number 7

Monthly Market Update

In This Issue
(click on logo to link to website)






 President's Perspective
It's Not Too Late: Register Now For The CalTRUST Mid-Year Economic Outlook Webinar

CalTRUST is pleased to announce its Mid-year Economic Outlook webinar, on Wednesday, July 13th from 3:00 to 4:00 pmAll CalTRUST investors and interested agencies are encouraged to register for the webinar, where Gary Schlossberg, Senior Economist with Wells Capital Management, will discuss: 
  • The US economic growth outlook into 2017; 
  • How California fits into the overall US outlook; 
  • Will the Federal Reserve resume interest-rate hikes this year; 
  • Which way for longer-term yields; and 
  • The election outlook and its likely effect on Federal tax, spending and regulatory policy. 

CalTRUST Updates

The CalTRUST Board of Trustees will hold their Fall Meeting in Santa Barbara County on September 14, 2016.  If you have any items you would like the Board to consider or if you would like to attend the meeting please contact Laura Labanieh at (916) 650-8186 or llabanieh@csacfinancecorp.org

CalTRUST extends a warm welcome to our newest investors:  Ironhouse Sanitary District, South Placer Municipal Utility District, Twentynine Palms Water District, Cutler Public Utility District, Elk Grove Water District, the Housing Authority of the City of Santa Barbara, and Valley Sanitary District.

As a reminder, in April the CalTRUST Board of Trustees added a Government Money Market Fund as response to upcoming Money Market Fund reforms which will take effect October 14, 2016. The CalTRUST Government MMF gives local agency investors: 
  • A stable $1.00 NAV, with no redemption gates or fees; 
  • Same-day liquidity for purchases and redemptions until 1 pm PST; "AAAm" and "Aaa-m" ratings from S&P and Moody's, respectively; 
  • Highly competitive money market rates; 
  • Best available expense ration in Select Class shares; and 
  • Full compliance with all provisions of Rule 2a-(7) governing SEC-registered money market funds. 
For more information on the CalTRUST funds, please contact me by email at the address listed below, or contact:
Lyle Defenbaugh
Wells Fargo Asset Management
(916) 440-4890
Laura Labanieh
CSAC Finance Corporation
(916) 650-8186
Norman Coppinger
League of CA Cities
(916) 658-8277
Neil McCormick
CA Special Districts Association
(916) 442-7887

Chuck Lomeli is CalTRUST President 
and Solano County Treasurer
Financial Markets Update
Brexit Turbulence Likely Takes Rate Increase 'Off-The-Table'

In his  Market Comment  for the first week of July, WellsCap Senior Economist Gary Schlossberg, looks at the implications of the UK's Brexit vote on rates and the equity markets in the second half of 2016.

To demonstrate the impact of Brexit -- at least in the short-term -- Gary notes that, in the days immediately following the vote, the Fed funds futures market assigned less than a 35% probability of a rate hike through September 2017.  Incredibly, the futures market reflected a higher probability of a rate-cut than a rate-hike into early next year.

As the late-June collapse in rates began to re-trace some of their declines in early July, and the equity market sell-off completely reversed, it confirmed two things:
  • Brexit is viewed by investors as less of a systemic threat to the Euro and the EU than is the recurring Greek debt crises; and
  • The resolution of the 'Brexit Crisis' will be drawn out and less than clear-cut, much like the lingering after-effects of the 2008-09 financial crisis. 
As Gary sees it, one of the central questions for the remainder of 2016 will be the equity markets' ability to extend recent gains.  Whereas the typical late-cycle growth pattern exhibits headwinds from rising rates, this eighth year of economic growth is accompanied by historically low rates, low oil prices, subdued inflation and strong demand for US 'safe-haven' assets.  In his view, this likely will be enough to overcome deteriorating earnings fundamentals -- for now.

Gary's complete Market Comment can be accessed here. 
CalTRUST Portfolio Snapshot (as of June 30, 2016)
1. CalTRUST Short-Term and Medium-Term and LAIF yields are net of fees.  Merrill 1-5 Year Indexes are unmanaged; and do not reflect any deduction for administrative fees or expenses.
2. CalTRUST and LAIF returns are net of all investment advisor, administrative and program fees.
3. Annualized.
4. The CalTRUST Short-Term and Medium-Term portfolios commenced operations on February 13, 2005.
CalTRUST Heritage Money Market Fund

Treasury Yield Curve 


2016 Calendar

July 13

CalTRUST Economic Update Webinar



September 5

Labor Day

Closed for Trading


October 10

Columbus Day

Closed for Trading


November 11

Veterans Day

Closed for Trading


November 24


Closed for Trading


November 25

Thanksgiving Holiday

Early Closure - 10:00 am PST


December 23 Observed

Christmas Eve

Early Closure - 10:00 am PST


December 26

Christmas Observed

Closed for Trading


December 30

New Year's Eve Observed

Early Closure - 10:00 am PST


January 2, 2016

New Year's Day Observed

Closed for Trading

The CalTRUST Monthly Market Update  is prepared monthly by the Investment Trust of California (CalTRUST) for participants in the CalTRUST Joint Powers Authority pooled investment program.  The Newsletter is prepared solely for informational purposes and is not to be construed as the solicitation of an offer to sell or of an offer to buy any security, nor is it intended to constitute a recommendation for the purchase or sale of any security.  The information contained herein is based upon data obtained from sources believed to be reliable, but is not guaranteed by us as being accurate and does not purport to be a complete summary of the available data.  Additional data will be provided upon request. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance.  Information, opinions and estimates contained in the Monthly Market Update reflect a judgment at its preparation date by CalTRUST and are subject to change without notice.  The price, value of, and income from any securities or financial instruments issued by the entities mentioned in this Monthly Market Update may fall as well as rise.