July 2018                                                                                                                                                             Volume 14 - Number 7
In This Issue
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 CalTRUST Update
CalTRUST Market Update & Bank Credit Analysis Webinar

Please join us on July 25th at 11:00am PST  as BlackRock offers insights into the current portfolio positioning for the CalTRUST funds and reviews the first days of the Liquidity Fund.  The BlackRock team will then provide a tutorial on bank credit analysis.   Register here for this free webinar!

CalTRUST Liquidity Fund Updates

CalTRUST participants have asked for a stable-NAV option and we've listened! The new CalTRUST Liquidity Fund officially opened on July 2, 2018 offering CalTRUST participants a new fund option. Characteristics of the Liquidity Fund Include:
  • Stable Net Asset Value (NAV)
  • Liquidity: Same Day Liquidity
  • Cut-Off Time: 12:00pm PST
  • Maximum Duration: 60 days
  • S&P Rating: Coming Soon (Anticipated to be completed in August)
Participants are able to transact in the new fund online via the CalTRUST Portal or via the paper transaction form.  The CalTRUST Information Statement has been updated with the Liquidity Fund information.  Additionally, the CalTRUST Investment Policy has been updated to include the Liquidity Fund.  We are excited to offer this new fund on the CalTRUST platform! 

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

Financial Markets Update
Market / Macro Update

Summary: In June the market saw a continuation of the intertwining dynamic between robust economic growth juxtaposed with the escalating trade tensions coming to the forefront. On the back of this risk-off sentiment, 10-year Treasuries rallied as much as 11 bps intra-month, before ending the period modestly higher at 2.85%. This further exacerbated the flatness of the yield curve, with the 2s10s spread reaching 33 bps, its tightest level since September 2007. 

June FOMC Meeting: As widely expected, the FOMC raised the target range for the federal funds rate by 25 bps, bringing the Fed's benchmark rate to a range of 1.75% to 2%. The Fed's outlook for the economy remains quite positive with the 2018 and 2019 median dots for projected rates moving up 25 bps, to 2.375% in 2018, and 3.125% in 2019. The FOMC collectively moved its expected growth rate for 2018 up by 0.1% to 2.8% and raise its core inflation forecast from 1.9% to 2%. 

ECB Meeting: The European Central Bank announced that it will end its QE program in December this year, with the final pace of asset purchases being tapered down to €15 billion per month for the final quarter (from the current €30 billion monthly pace). In addition, the market was taken by surprise with the clarity and change to its forward guidance - the ECB stated that it does not expect to raise rates until after next summer. 

US Non-farm payrolls: May non-farm payrolls gained 223K jobs, well above expected 188K. The unemployment rate fell to 3.8%, an 18-year low (May 2001). The average hourly earnings increased 0.3% (MoM) and 2.7% (YoY). Additionally, March print was revised up from 135K to 155K and April ended worse from 164K to 159K.  

US Q1 GDP (3rd Revision): The third revision of US Q1 GDP was revised downward yet again to 2% from an initial first reading of 2.3%. The latest revision was driven by another reduction in consumer spending, which only rose by 0.9% compared to 1%. Also, spending on services came in lower with a reading of 1.5%, which compares to an initial estimate of 1.8%. Lastly inventories and net exposure also detracted from Q1 growth.  

ISM Manufacturing (June): The ISM manufacturing index surprised to the upside increasing from 58.7 to 60.2. This positive report was primarily driven by production, supplier deliveries and new export orders, while inventories and employment remained unchanged. 

CPI: As expected, the headline CPI print came in at 0.2% (MoM), and at 2.8% (YoY), while the core measure rose 0.2% (mom), and 2.2% (YoY). At the headline level, CPI was driven by an increase in energy prices (0.9%). The core measure was driven primarily by shelter and medical care prices.  

Performance (as of June 30, 2018)

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.
July 25, 2018
CalTRUST Webinar

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.