June 2016                                                                                                                                                            Volume 12 - Number 6

Monthly Market Update

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






President's Perspective
CalTRUST Updates - Economic Update Webinar Scheduled! 
CalTRUST is pleased to announce its Mid-year Economic Outlook webinar, on Wednesday, July 13th at 3:00pm. All 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. 


Late Spring Brings Warm Weather & Investment Policy Update Season
Late-Spring not only ushers in the 'hot season' in California, but the season when many local agencies undertake their annual investment policy review and update. This presents the perfect opportunity to ensure that CalTRUST is a permissible investment for your agency. We at CalTRUST have assisted numerous agencies with the update process; and would be happy to provide any interested agency with sample language authorizing CalTRUST. Any local agency wishing to update its investment policy is invited to contact me or one of the CalTRUST representatives listed below.

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
Disappointing Jobs Report Raises Fresh Doubts About Outlook For Growth; Pours Cold Water On Early Fed Rate Increase


In his most recent Market Comment, WellsCap Senior Economist Gary Schlossberg, looks at the implications of the pervasively weak May jobs report. 

As Gary sees it, the dismal early-June data raises fresh questions about the outlook for "risk" vs. "safe-have" assets. Moreover, the disappointing data corroborates the slow-growth warning flashed by a "flattening" yield curve - a narrowing spread between shorter- and longer-term Treasury securities' rates. As Gary points out, in the first week of June, the spread between two- and ten-year securities had shrunk to less than a percentage point - the lowest spread since late-November 2007. Not coincidentally, the eve of the last recession. 

Notwithstanding the fact that yield spreads have a strong predictive track record for the economy - so much so that it is included in the Conference Board's index of leading indicators - a couple factors in this cycle could distort the yield curve - economy link: 
  • Secular disinflation and strong foreign demand for Treasury securities account for most or the yield spread narrowing; and 
  • Historically low net interest margins have not prevented a recovery in bank lending. 

Investors may be leery of rotating back to risk assets this time if inflated asset values in a slow-growth, low rate environment leaves them once again exposed to a U-turn in the interest rate and dollar outlook. 

Gary's complete Market Comment can be accessed here. 
CalTRUST Portfolio Snapshot (as of May 31, 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 1 

Independence Day Observed

Early Closure - 10:00 am PST


July 4

Independence Day Observed

Closed for Trading

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.