INVESTMENT
PORTFOLIO
REPORT FOR
DECEMBER 31, 2024
City Council
February 25, 2025
CITY TREASURER’S
OFFICE
PRESENTATION SUMMARY
• Portfolio Overview
• Economic Conditions
• Outlook and Strategy
CITY TREASURER’S
OFFICE
PORTFOLIO
OVERVIEW
CITY TREASURER’S
OFFICE
$400
$450
$500
$550
$600
$650
City Investment Pool Combined Successor Agency and Housing Authority Historical Market Value
$673 M
$2 M
(in millions)
$40 M
CALPERS
payment
$32 M
CALPERS
payment
4 Portfolio Market Value by Asset Class
Portfolio Market Value
$ 673 M
5 Negotiable Certificates of Deposit, $53M
8%
Joint Powers Authority Pool, $135
20%
Corporates - Medium Term Notes, $125M
18%
Money Market, $60M
9%
Municipal Bonds, $75M
11%
Supranational Obligations, $32M
5%
US Agency, $174M
26%
US Treasury Notes, $20M
3%
Compliance – Portfolio Allocation
ASSET CLASS MARKET
VALUE PORTFOLIO % LEGAL MAXIMUM POLICY LIMITS COMPLIANCE Negotiable CDs $ 53 M 8% 30% 0 to 30%
Joint Powers
Authority Pool $ 135 M 20% No limit 0 to 25%
Corporates –
Medium Term Notes $ 125 M 18% 30% 0 to 30%
Money Market $ 60 M 9% 20% 0 to 20%
Municipal Bonds $ 75 M 11% No limit 0 to 30%
Supranational
Obligations $ 32 M 5% 30% 0 to 15%
US Agency $ 174 M 26% No limit 0 to 90%
US Treasury $ 20 M 3% No limit 0 to 100%
6 $85
$138
$120
$49
$86
$195
$0
$50
$100
$150
$200
$250
$300
0-1 Year 1-2 Years 2-3 Years 3-4 Years 4-5 Years
Maturity Range
Money Market /
Joint Powers Authority Pool
City
Investment
Pool
(in millions)
Portfolio Duration
1.53 years
7 0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Jul-23
Oct-23
Jan-24
Apr-24
Jul-24
Oct-24
Portfolio Yield 2-Year Treasury 12-Month Rolling Average LAIF Average Monthly Yield Yield
4.43%
4.38%
3.45%
While we continue to take advantage
of short-term rates, we are also
locking in longer yields especially as
spreads rise with the continuing dis-
inversion of the yield curve
8 Yield Comparison (June 2024)
9 Source: City of Glendale - Annual Investment Portfolio Review Fiscal Year ending June 30, 2024 Income Summary
$1.8 M
in December 2024
Interest Income
10 $0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
Investment Spotlight
City of Burbank invested $3 million in a 5-year bond yielding 4.64% Walt Disney Company
• Headquartered in Burbank since 1940
• 2nd largest employer in Burbank with ~10,000 employees • Mission is to “to entertain, inform and inspire people around the globe through the power of unparalleled storytelling…” • Provides charitable donations to many Burbank-based non-profit organizations, including Home Again LA, Family Services Agency, the Boys and Girls Club, Burbank Arts and Education Foundation, the Burbank Chamber of Commerce, Burbank Temporary Aid Center, etc. • Since inception more than 40 years ago, Disney VoluntEARS have donated over 65,000 volunteer service hours supporting local causes in Burbank • Committed $15 M to Los Angeles area fire relief and rebuilding efforts 11
CITY TREASURER’S
OFFICE
ECONOMIC
CONDITIONS
Job Market
The labor market is cooling, but
remains solid with the
unemployment rate at 4%.
Average hourly earnings continue to
outpace inflation. Job quits are down
22% from peak in 2022 13
Currently ~1.1
job openings per
unemployed worker
An Aging Population
The US demographic shift leads to
higher demand for medical and
healthcare services, while shrinking
the working age population
65% of job growth in 2024
came from the healthcare and
government sectors, masking the
weakness in other industries 14
Americans age 55 and
older now make up 38%
of the US population
IT unemployment
rate now at 5.7%
The Value of a College Degree
The number of Americans with
college degrees grew 80% from 2001
to 2021, even as the US labor force
only grew less than 13%
While there is significant competition
for white collar jobs, there is still
strong employer demand and wage
growth in service and trade sectors. 15
Inflation
January’s inflation is the largest
monthly increase since August 2023,
much higher than economic forecasts
Egg prices are now above the
previous record high in 2023, and
about double the price from last year 16
Burbank Egg Prices*
Trader Joe’s - $3.49
Costco - $3.85
Sprouts - $3.99
Whole Foods - $4.99
Vons - $6.99
Walmart - $7.42
Aldi - $7.92
Ralphs - $7.99
Target - $9.39
*for 1 dozen non-organic cage-free,
if available in stock, as of 2/18/25
GDP and Consumer Spending
While GDP growth slowed in Q4,
overall, it exceeded forecasts for the
year, growing 2.5% in 2024
Households have remained resilient
and consumer spending increased
4.2%, the fastest since early 2023,
continuing to propel GDP growth 17
Housing Market
18 While active housing inventory is still
below pre-pandemic levels, it is up
25% nationally from a year ago
(up 32% in CA)
With current 30-year mortgage rates
still around 7%, mortgage rates
would need to drop below 5.5% to
increase resale turnover
Wildfires and Home Insurance
19 In addition to the demand from
those displaced, wildfires increase
home prices as new homes are built
and fireproofing features added
Average annual homeowners
insurance premium in Burbank is
~$1647 in the flats and
~$2668 in the hills.
Asset Prices and Recession Probability
S&P 500 recently hit
a record high
Economists see a 22% chance of
a recession in the next year, the
lowest level since January 2022
20 The US dollar also
remains relatively strong
CITY TREASURER’S
OFFICE
OUTLOOK AND
STRATEGY
5-Year Treasury Yields
5-year Treasury yields have
rebounded with concerns about
inflation, the federal deficit, and
government policies
22 Federal Reserve
23 With a solid job market and the
lingering uncertainty surrounding
inflation, the Federal Reserve held
rates steady in January
Markets now do not anticipate any
rate cuts until June at the earliest,
with at most two cuts in 2025
Tariffs
24 Additional tariffs on China, as well as
proposed tariffs on Mexico, Canada,
and certain sectors, may ultimately
mean higher prices for consumers
While Mexico, not China, is now the
US’s largest import partner, China
floods other markets with its exports,
of which some still end up in the US
via other countries
Federal Deficit
Mandatory outlays like Medicare,
Medicaid, and Social Security
continue to drive spending growth 25
As the US government borrows more
money, it may need to offer higher
rates to investors in the long run,
which lead to higher interest costs
Projections and Uncertainty
26 The frequency of news articles
reflecting economic uncertainty has
risen sharply in recent months
US growth projected to be at 2.7% in
2025, and 2.1% in 2026, highlighting
the strength of the US economy,
compared to other advanced nations
Continuing Strategy
• Ongoing credit monitoring of portfolio holdings
• Comprehensive due diligence of new investmentsSafety
• Maintaining ample liquidity to meet both anticipated and unexpected cash flow needsLiquidity
• Strategic allocation to benefit from highest short-end rates • Locking in long-term yields to generate future incomeYield 27 CITY TREASURER’S
OFFICE
Questions?
Krystle Palmer
City Treasurer
(818) 238-5880
[email protected]