May 2018                                                                                                                                                             Volume 14 - Number 5
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 CalTRUST Update
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CalTRUST Market Update & Total Return Investing Webinar

Please join us on May 24th as BlackRock discusses the present state of fixed income markets and how it continues to impact the investment landscape for short duration strategies. BlackRock will offer insights into the current portfolio positioning for the CalTRUST short and medium term fund and the factors contributing to funds' performance and NAV changes. The team will also give a brief tutorial on the drivers behind total return investing.   Register here for this free webinar!

 
Laura Labanieh
Administrator
(916) 650-8186; laura@caltrust.org
Kyle Tanaka
Member Services Associate
(916) 650-8114; kyle@caltrust.org

Financial Markets Update
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Market / Macro Update

Summary: Amongst a global backdrop of slowing economic growth, the US economy continued to strengthen on the back of robust economic data, easing geopolitical tensions, and the broad-based appreciation of the USD. In US / International trade relations, the month of April further saw a tit-for-tat trade dispute escalation between the US and China. Fears around the rising trade tensions early in the month were tempered by conciliatory overtones as China invited the US to engage in trade policy negotiations. Ongoing global pressures weighed on markets, as April saw a joint military intervention in Syria between the US, the UK, and France. The US also threatened to impose additional sanctions on Russia, which helped push oil prices to their highest levels since 2014. In the rates markets, the 2s10s yield curve continued to flatten in April, with the curve reaching its tightest levels since 2007 before reversing and ending the month relatively unchanged at 46 bps. The 2s30s curve marginally flattened finishing the month at 62 bps. The US 10-year Treasury yield reached 3.0%, its highest level in 4 years. 

FOMC Meeting: The March FOMC meeting minutes portrayed Committee's confidence in outlook on above-trend growth and that inflation would move higher and meet their 2% target. In discussion on the risks to the outlook, the Committee deliberated whether the forecast for the fiscal stimulus boost was too high or too low. Also, tariffs and the risk of trade tensions were mentioned but not overly stressed. 

US Non-Farm Payrolls: While March non-farm payrolls gained 103K jobs, a bit weaker than expected 185K, the underlying strength in the labor markets remains undeniable. Coming after a quite warm February, the unseasonably wintery weather in March led to the softening in construction and retail employment. The March three-month moving average of non-farm employment gains is now at 202K and the 12-month moving average is at 188K.The unemployment rate fell 7 bps to 4.07% and average hourly earnings accelerated to 2.7%. 

Q1 US GDP: The US economy expanded by 2.3% in the first quarter, which beat estimates (2%), but recorded the slowest pace of growth since Q1, 2017. The positive contributor was the stronger-than-expected federal government spending (though some seasonal effects may lead us to fade this number going forward). The main detractor not surprisingly was private domestic demand which rose by an annualized 1.7% and was mainly driven by a slowdown in consumption growth (1.1%) which could be transitory 

Retail Sales: US retail sales came in better than expected in March, with headline retail sales increasing 0.6% (mom) and the core measure rising 0.4% (mom). This positive print was mostly driven by 2% (mom) increase in autos and auto parts sales, followed by furniture, electronics and online retail. However, March retail sales report had downward revisions for both January and February that offset some of the strength in March sales. 

US CPI: Headline CPI print came in at -0.1% (MoM), and at 2.4% (YoY), while the core measure rose 0.2% (MoM), and 2.1% (YoY), as expected. The headline number was driven by a decline in energy prices and a mean-reversion in post-hurricane rise in auto prices.  


Performance (as of April 30, 2018)
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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.
Calendar
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May 14, 2018
CalTRUST Webinar

May 28, 2018
Closed for Trading 

July 4, 2018
Closed for Trading

September 3, 2018
Closed for Trading

September 18-19, 2018
Board of Trustees Meeting

October 8, 2018
Closed for Trading

November 12, 2018
Closed for Trading

November 22, 2018
Closed for Trading

December 25, 2018
Closed for Trading

January 1, 2019
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.