June 2018                                                                                                                                                             Volume 14 - Number 6
In This Issue
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 CalTRUST Update
CalTRUST Liquidity Fund Update

CalTRUST participants have asked for a stable-NAV option and we've listened! The new CalTRUST Liquidity Fund will officially be funded and open 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
As of Monday, July 2nd, you will be able to transact in the new fund online via the CalTRUST Portal or via the paper transaction form.  The updated hardcopy transaction form will be available through the portal on Monday. 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.  Per the CalTRUST JPA, participants must vote to approve any changes to the Investment Policy. Participant primary contacts will be receiving another communication later today to vote on the changes to the Investment Policy - no substantive changes were made to investment guidelines, only the inclusion of the Liquidity Fund. We are excited to offer this new fund on the CalTRUST platform! 

CalTRUST Board Updates

The CalTRUST Board of Trustees voted this week to nominate Bobbie Ormonde, CPA, Deputy General Manager - Finance and Administration, Westlands Water District, to serve on the Board of Trustees.  Per the CalTRUST JPA, Trustees must be confirmed by the JPA members.  As such, JPA member primary contacts will receive another communication later today to vote on Bobbie's appointment.  Bobbie has 33 years experience in California public agencies, having spent the last seven (7) years with Westlands Water District and, prior to Westlands, eight (8) years with Fresno County. Westlands Water District was a founding agency of CalTRUST and we look forward to working with Bobbie! 

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!

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 the first half of May the rate's markets saw a continuation of the trend in April with front-end rates pressured higher. In late May the market took an aggressive risk-off turn with rates rallying across the curve as continued uncertainty around US tariffs and Italy's political landscape drove markets. Specifically, the US imposed tariffs on steel and aluminum imports onto its NAFTA and European Union allies. In response, the impacted countries took their own retaliatory measures, stoking fears of a tit-for-tat trade war. Political developments in Italy dominated the market narrative at month-end, which eventually saw the election of Giuseppe Conte as Prime Minister, ending weeks of uncertainty around the Northern League's/Five-Star Movement's ability to form a new government. 

FOMC Meeting/Minutes: In the May statement, the Federal Reserve (Fed) left interest rates unchanged which was in-line with expectations, with policymakers emphasizing the "symmetric" inflation target that would allow inflation to run modestly above or below the 2% target. The latest Federal Open Market Committee (FOMC) minutes underscored a sustained path towards gradual policy normalization, and signaled for an interest rate hike in June. Some participants expressed concern over the flatness of the yield curve and the risk of curve inversion, as well as risks around the tariff and trade developments. 

US non-farm payrolls: April non-farm payrolls gained 164K jobs, slightly below expected 192K, displaying another solid month of job gains, with the unemployment rate breaking down to 3.9%, the lowest level since December 2000. The labor force participation rate declined 14 bps (mom) to 62.8% and the headline average hourly earnings rose 15 bps (mom) in April, bringing the year-over-year change to 2.6%. April payroll print is likely to hold virtually no influence on a Fed that has very clearly stated it is moving policy rates three-to-four times this year and probably the same number next year. 

Q1 US GDP: The second revision of Q1 GDP was revised lower to 2.2% from 2.3. Consumer spending, which accounts for almost 70% of the US economy, was revised downward driven by services consumption. Additionally, the bulk of the downward revision came from inventories and net exports balance, which could bode well for future readings. 

Retail Sales: Headline retail sales increased 0.3% (MoM) in April, broadly in line with expectations. Core retail rose 0.4% (MoM) in April after an upwardly revised 0.5% gain in March. This report showcases that the consumer spending is rebounding from the first quarter weakness driven by solid labor market and higher after-tax incomes. 

US CPI: The headline CPI print came in at 0.2% (MoM), and at 2.5% (YoY), while the core measure rose 0.1% (MoM), and 2.1% (YoY), slightly softer than expected. At the headline level, CPI was driven by an increase in energy prices (1.4%) and food (0.3%). The core measure was driven primarily by shelter and apparel prices.

Performance (as of May 31, 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 2, 2018
Liquidity Fund Launch

July 4, 2018
Closed for Trading

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.