November 2016                                                                                                                                                        Volume 12 - Number 11

Monthly Market Update

In This Issue
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 President's Perspective
CalTRUST Updates

In early September, CalTRUST Staff contacted program participants regarding updating their contact information and setting up Online Trading Access. We are pleased to announce that the new CalTRUST Program Registration Form and Participation Agreement has been finalized and can be accessed by clicking the link below. Please use this form to indicate any updates to your account information. If you have any question regarding the new form or updating your information, please contact Kyle Tanaka at (916) 650-8114 or

In conjunction with the new form, CalTRUST will be holding an Online Trading Webinar in January. This webinar will be free for Program Participants, and will provide you the necessary information to complete transactions in easy and efficient manner. We will send out registration and event details shortly!

CalTRUST Funds Offer Convenience, Diversification, Liquidity: A Great Option For Investment Of Property Tax Proceeds

For more than ten years, the CalTRUST funds have offered a safe and convenient means for local agencies to maintain a high degree of liquidity and diversification in their investments. The two CalTRUST Money Market Fund (MMF) options - the CalTRUST Government MMF and CalTRUST Heritage MMF - are each rated "AAAm" and "Aaa-mf" by S&P and Moody's, respectively, and offer same-day liquidity.  Similarly, the CalTRUST Short-Term Fund, rated "AAf/S1+" by S&P, provides next-day liquidity. And the CalTRUST Medium-Term Fund provides weekly liquidity.
Taken together, the CalTRUST funds give local agencies a highly-efficient means of allocating funds across the 0-5 year fixed-income spectrum accessible to local agencies; and a cost-free ability to reallocate among those options as local circumstances change.

Given the breadth of the fixed-income spectrum covered by funds, CalTRUST is an ideal option for local agencies when it comes to the investment of property tax proceeds.

To take maximum advantage of all the benefits of the CalTRUST program, local agencies should ensure that their local investment policy authorizes the use of CalTRUST. We at CalTRUST have assisted numerous agencies with the investment policy update process; we'd be happy to assist any interested party.

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
Deflation Worries?  That's So 2016 (And 2015) 
For 2017 The Worry Is The Long-Awaited Return Of Inflation

In his most recent post to Advantage Voice, Wells Fargo Funds Management's Chief Portfolio Strategist, Brian Jacobsen, looks at the inflation outlook heading into 2017. Unlike 2015 and 2016, when wary investors were on the lookout for the return of deflation, 2017 will likely see headline inflation pushing higher, according to Brian.

Year-over-year changes in the personal consumption expenditure (PCE) index - the Fed's preferred inflation index - have jumped to 1.6% to 1.7%.  While not very high, it is significantly higher that the 0.6% rate at the end of 2015, Brian notes.

For the past couple years, at least, Brian notes that there has been a divide between service price inflation and goods price deflation, especially durable goods. During 2016, however, goods price deflation has been slowly dissipating and turning towards inflation.  In 2017, this likely will result in goods price inflation, helping to push the PCE index closer to or even above the Fed's 2% target. Adding to this will be this year's upward movement in energy prices.

Investors appear already to be anticipating this shift, which could be a contributing factor to the recent rise in intermediate and long-term Treasury yields. And, with revolving consumer credit increasing at a 7% pace, commercial/industrial lending expanding at 9.3%, it looks like inflation is more likely to rise than fall.

Absent a big shock, it looks like the low for yields is behind us. 

Brian's complete  blog post  can be accessed  here.
CalTRUST Portfolio Snapshot (as of October 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 Government & Heritage Money Market Funds

Treasury Yield Curve 

 2016 Calendar 


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.