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 – June 2023
Hawkish pause, hawkish messaging, and the Committee signals more rate hikes to come.
The Federal Reserve Open Market Committee voted to leave the benchmark federal funds target range unchanged at 5.00% to 5.25%. This was a unanimous decision, but the Committee delivered a hawkish pause by leaving the door open to moderate hikes.
For the first time in more than a year, the Fed left interest rates unchanged. The Committee noted in the statement, “holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy.” Chairman Powell backed this statement up during his press conference when he commented that, “the full effects of Fed tightening have yet to be felt.”
A robust job market, the low unemployment rate, and elevated inflation were all highlighted in the statement and Powell’s during press conference. The U.S. banking system was noted as being “sound and resilient.” The Committee acknowledged that “tighter credit conditions for households and businesses is likely to weigh on economic activity, hiring and inflation.” But added that the extent of these effects continues to remain uncertain. As the committee continues to assess the economic data coming in, they remain highly attentive to inflation risks which Powell noted are still to the upside.
The Summary of Economic Projections (“SEP”) was updated at today’s meeting and reflects the Fed’s updated view of somewhat stronger growth, slightly lower unemployment, and higher core inflation. Committee members anticipate the terminal federal funds rate to rise 50 basis points to a median of 5.625% by the end of 2023. This equates to two additional quarter-point rate hikes this year. If nothing else, this keeps the July 26th a live meeting and Chair Powell retains flexibility as the FOMC nears the end of the tightening cycle. Additionally, the Fed’s projection for interest rates in 2024 was increased 37.5 basis points to 4.625% from 4.25% and the 2025 dot increased by 25 basis points to 3.375% from 3.125% from the March SEP. The longer run policy rate was left unchanged at 2.5 percent.
Turning our attention to the broader economy, the Committee forecasts that the economy will grow 1% in 2023,an upward projection their March projection of 0.4%.The 2024 real GDP forecast was revised down slightly to 1.1% from 1.2%, while the unemployment rate was seen coming in at 4.1% this year down from 4.5% from March’s projection.
The initial kneejerk reaction was a sharp selloff in the front end of the curve, flattening the curve beyond the recent range. 2’s/10’s dropped by -95.8 basis points and 5’s/30’s reached -18.9 basis points. The hawkish spin to June’s announcement and Powell’s insistence that no rate cuts are planned for this year, seemed to catch the market off guard.
The Fed’s decision to pause does not mean their fight against inflation and the tightening cycle is over just yet. The median dot for 2023 being adjusted upward to 5.6% indicates at least one more 25 basis point rate hike at either the July or September meetings. The Fed’s willingness to remain engaged means that the yield curve will remain inverted for now.
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. This material is for AMLIP participants and administrators ONLY and is NOT for public distribution.

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 $693,486,982 balance and closed with a balance of $623,984,833. The seven-day effective yield ended the month at 5.00%. The monthly seven-day average effective yield for the month was 4.98%. Average maturity ended the month at 12 days.

At the end of the month, the Series I portfolio had 24% of its portfolio assets allocated to overnight investments/cash, corporate securities made up 2% of the assets, commercial paper represented 17%, CDs represented 5%, and Treasury & Agency represented 52%.

 
Data: KeyBank, NA

Series II Recap

Series II saw its first deposits in June and closed with a balance of $44,965,837. 7-day effective yield and average maturity will reported on in future months

At the end of the month, the Series II portfolio had 3% of its portfolio assets allocated to overnight investments/cash, corporate securities made up 7% of the assets, commercial paper represented 24%, CDs represented 22%, and Treasury & Agency represented 44%.

 
Data: KeyBank, NA

Comparisons
On June 16th, 2023, the S&P AAA & AA Rated GIP Tax 30 Day Yield Index was 5.08% and the Series I Pool’s 7-day effective rate of 4.97% was on the same day. All Pool rates are quoted net of fees and expenses. 
Data: KeyBank, NA & S&P

  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 Eagle, City of Nome, City of
Akutan, City of Eek, City of North Pole, City of
Alaska Association of Egegik, City of Northwest Arctic Borough
 Municipal Clerks Elim, City of Nulato, City of
Alaska Government Finance Fairbanks North Star Borough Old Harbor, City of
 Officers Association (AGFOA) Fairbanks, City of Palmer, City of
Alaska Industrial Development False Pass, City of Pelican City School District
 Export Authority (AIDEA) Fort Yukon, City of Pelican, City of
Alaska Municipal League Galena, City of Petersburg, City of
Alaska Municipal Gustavus, City of Pilot Station, City of
 Management Association Haines Borough Pribilof School District
Aleknagik, City of Homer, City of Quinhagak, City of
Aleutians East Borough Hoonah, City of Sand Point, City of
AML/JIA Huslia, City of Selawik, City of
Anchorage Community Juneau, City and Borough of Seldovia,City of
 Development Authority Kake City School District Seward, City of
Angoon, City of Kenai Peninsula Borough Sitka, City and Borough of
Annette Islands School District Kenai, City of Soldotna, City of
Atka, City of Ketchikan Gateway Borough Southwest Alaska Municipal
Atqasuk, City of King Cove, City of Conference
Barrow, City of Kodiak Island Borough St. Paul, City of
Bethel, City of Kodiak, City of Tenakee Springs, City of
Brevig Mission, City of Kotzebue, City of Toksook Bay
Bristol Bay, Borough of Koyuk, City of Unalakleet, City of
Chevak, City of Manokotak, City of Unalaska, City of
Chuathbaluk, City of Marshall, City of Upper Kalskag
Cold Bay, City of Matanuska-Susitna Borough Wasilla, City of
Cordova, City of McGrath, City of Whale Pass, City of
Delta Junction, City of Mekoryuk, City of Whittier, City of
Denali Borough Mekoryuk, Village of Wrangell, City and Borough of
Dillingham, City of New Stuyahok, City of Yakutat, City and Borough of