Series II is Open for Deposits
Series II seeks to attain the highest level of return consistent with the objectives of preservation of capital and liquidity.
To read about Series II visit amlip.org and find the Series II Supplement document.
Contact Blake Phillips at blake@apcm.net or Lindsey Cashman at lindsey@apcm.net at Alaska Permanent Capital Management with any questions you have about joining Series II.
Quarterly Letter to Members – September 2023
Hike once more before 2024?
The Federal Reserve Open Market Committee unanimously voted to hold the benchmark Federal Funds rate unchanged, keeping the target range at 5.25% to 5.50%. Their statement also remained effectively unchanged, except for comments regarding employment. “Job gains have been robust in recent months” was changed to “Job gains have slowed in recent months but remain strong.” In addition, economic activity was upgraded to “solid” from “moderate.”
The Committee provided their updated Summary of Economic Projections (“SEP”) at this meeting. Twelve participants still anticipate there will be one more rate hike before year-end. The median dot (or forecast) shows the policy rate is expected to be at 5.6% by year-end 2023. Longer-term, the median forecast for the Federal Funds rate was lifted by 0.5% relative to the June SEP forecasts for 2024 from 4.6% to 5.1% and from 3.4% to 3.9% for 2025. Both increases are representative of the Fed’s “higher for longer” stance.
Participants believe that real Gross Domestic Product (“GDP”) will grow 2.1% in 2023, 110 basis points higher than their June forecast. They also expect the economy to expand by 1.5% in 2024, up from 1.1% in the previous SEP. The real GDP growth rate forecast in 2025 remained unchanged at 1.8%.
The unemployment rate is forecasted to end 2023 at 3.8%, a downward revision from 4.1%. The jobless rate was also adjusted down to 4.1% in 2024 and 2025; previously, participants projected jobless rates at 4.5% in both years.
Core Personal consumption expenditures (“PCE”) inflation, the Fed’s preferred measure of inflation (which excludes the volatile food and energy components), was revised lower from 3.9% to 3.7% for 2023. Core PCE was left unchanged in 2024 at 2.6% and was adjusted higher from 2.2% to 2.3% in 2025.
During his press conference, Chairman Jerome Powell noted that the Committee has made a lot of progress in its fight to bring inflation back to their 2.0% target, but that we have yet to see the full effects of the 11 previous rate hikes. They will continue to assess the incoming economic data in preparation for the November meeting and “proceed carefully” as he added, “You know ‘sufficiently restrictive’ only when you see it.”
U.S. Treasury yields were mixed, with the 10-year yield down nearly 2 basis points to approximately 4.35%. The 2-year yield added 1.5 basis points to approximately 5.12%. The 30-year bond shed close to 3 basis points to 4.40%.
Investors should continue to remain nimble and expect some market volatility as we navigate the possibility of a government shutdown, future economic data reports and the final two FOMC meetings of the year.
Any opinions, projections or recommendations in this report are subject to change without notice and are not intended as individual investment advice. The information in this letter is based on data obtained from recognized sources and is believed to be reliable. Past performance is not indicative of future results.
INVESTMENTS ARE: NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE. NOT A DEPOSIT. NOT INSURED BY ANY FEDERAL OR STATE GOVERNMENT AGENCY
Series I Recap
The month opened with a $724,764,592 balance and closed with a balance of $766,700,089. The seven-day effective yield ended the month at 5.30%. The monthly seven-day average effective yield for the month was 5.28%. Average maturity ended the month at 33 days.
At the end of the month, the Series I portfolio had 14% of its portfolio assets allocated to overnight investments/cash, corporate securities made up 3% of the assets, commercial paper represented 4%, CDs represented 3%, and Treasury & Agency represented 76%.
Series II Recap
The month opened with a $45,631,328 balance and closed with a balance of $ 45,831,021. The thirty-day SEC yield ended the month at 5.44%.
At the end of the month, the Series II portfolio had 4% of its portfolio assets allocated to overnight investments/cash, corporate securities made up 17% of the assets, commercial paper represented 11%, CDs represented 19%, and Treasury & Agency represented 49%.
Comparisons
On September 15th, 2023, the S&P AAA & AA Rated GIP Tax 30 Day Yield Index was 5.38%, the Series I Pool’s 7-day SEC effective rate was 5.30%, and the Series II Pool’s 30-day SEC effective rate was 5.55%. All Pool rates are quoted net of fees and expenses.
AMLIP Board Members
Terry Eubank – President
City of Kenai
Cheyenne Heindel – Vice President
Matanuska-Susitna Borough
Jody Tow – Treasurer
Petersburg Borough
Nils Andreassen – Executive Director
Alaska Municipal League
Mason Villarma
City & Borough of Wrangell
Kris Erchinger
City of Whittier
Melissa Haley
City & Borough of Sitka
Angie Flick
City & Borough of Juneau
AMLIP Membership
Adak, City of
Akutan, City of
Alaska Association of
Municipal Clerks
Alaska Government Finance
Officers Association (AGFOA)
Alaska Industrial Development
Export Authority (AIDEA)
Alaska Municipal League
Alaska Municipal
Management Association
Aleknagik, City of
Aleutians East Borough
AML/JIA
Anchorage Community
Development Authority
Angoon, City of
Annette Islands School District
Atka, City of
Atqasuk, City of
Barrow, City of
Bethel, City of
Brevig Mission, City of
Bristol Bay, Borough of
Chevak, City of
Chuathbaluk, City of
Cold Bay, City of
Cordova, City of
Delta Junction, City of
Denali Borough
Dillingham, City of
Eagle, City of
Eek, City of
Egegik, City of
Elim, City of
Fairbanks North Star Borough
Fairbanks, City of
False Pass, City of
Fort Yukon, City of
Galena, City of
Gustavus, City of
Haines Borough
Homer, City of
Hoonah, City of
Huslia, City of
Juneau, City and Borough of
Kake City School District
Kenai Peninsula Borough
Kenai, City of
Ketchikan Gateway Borough
King Cove, City of
Kodiak Island Borough
Kodiak, City of
Kotzebue, City of
Koyuk, City of
Manokotak, City of
Marshall, City of
Matanuska-Susitna Borough
McGrath, City of
Mekoryuk, City of
Mekoryuk, Village of
New Stuyahok, City of
Nome, City of
North Pole, City of
Northwest Arctic Borough
Nulato, City of
Old Harbor, City of
Palmer, City of
Pelican City School District
Pelican, City of
Petersburg, City of
Pilot Station, City of
Pribilof School District
Quinhagak, City of
Sand Point, City of
Selawik, City of
Seldovia,City of
Seward, City of
Sitka, City and Borough of
Soldotna, City of
Southwest Alaska Municipal
Conference
St. Paul, City of
Tenakee Springs, City of
Toksook Bay
Unalakleet, City of
Unalaska, City of
Upper Kalskag
Wasilla, City of
Whale Pass, City of
Whittier, City of
Wrangell, City and Borough of
Yakutat, City and Borough of
