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HomeMy Public PortalAbout2023-01-17-LPFAThis Agenda contains a brief general description of each item to be considered. Copies of the Staff reports or other written documentation relating to each item of business referred to on the Agenda are on file in the Office of the City Clerk and are available for public inspection. Any person who has a question concerning any of the agenda items may call the City Manager at (310) 603-0220, ext. 200. Procedures for Addressing the Council IN ORDER TO EXPEDITE CITY COUNCIL BUSINESS, WE ASK THAT ALL PERSONS WISHING TO ADDRESS THE COUNCIL SUBMIT YOUR COMMENTS IN ADVANCE TO CITYCLERK@LYNWOOD.CA.US OR FILL OUT A FORM PROVIDED AT THE PODIUM, AND TO TURN IT IN TO THE CITY CLERK PRIOR TO THE START OF THE MEETING. FAILURE TO FILL OUT SUCH A FORM WILL PROHIBIT YOU FROM ADDRESSING THE COUNCIL IN THE ABSENCE OF THE UNANIMOUS CONSENT OF THE COUNCIL. AGE N D A Ly nwood Public Financing Authority TO BE HE L D ON January 17, 2023 C OU N C IL C H AMB ER S - 11350 B U L L IS R D. LYN WOOD , C A 90262 or Web conference via ZOOM - To participate via Zoom or by telephone: 1-669-900-9128 or 1-253-215-8782 Meeting ID: 835 2029 8238 Duly Posted on 1/12/2023 B y MQ 6:00 P M 1.C ALL TO OR D ER 2.C E R T IF IC ATION OF AGE N D A P OS T IN G B Y S E C R E TARY 3.R OL L C AL L OF ME MB E R S Oscar F lores, P resident Ri ta S oto, Vice P resident Gabri ela C amacho, Member J uan Munoz-Guevara, Member J ose L uis S olache, Member 4.GOV E R N ME N T C OD E S E C T ION 54954.3 Members of the City Council are also members of Lynwood Public Financing Authority, which is concurrently convening with the City Council this evening and each Council Member is paid an Additional Stipend of $100 for Attending the Lynwood Public Financing Authority Meeting. Further, the Authority is scheduled to meet four (4) timer per year. If additional meetings are required beyond the scheduled four (4) meetings, the City Council will only get paid for the first four(4) meetings. P U B L IC H EAR IN G C ON SEN T C AL E N D AR ALL MATTERS LISTED UNDER THE CONSENT CALENDAR WILL BE ACTED UPON BY ONE MOTION Lynwood Public Financing Authority - Page 1 of 33 AFFIRMING THE ACTION RECOMMENDED ON THE AGENDA. THERE WILL BE NO SEPARATE DISCUSSION ON THESE ITEMS PRIOR TO VOTING UNLESS MEMBERS OF THE COUNCIL OR STAFF REQUEST SPECIFIC ITEMS TO BE REMOVED FROM THE CONSENT CALENDAR FOR SEPARATE ACTION. 5.T R E AS U R E R'S MON T H LY IN V E S T ME N T R E P OR T Comments: The purpose of this item is to have the Honorable P resident and Members of the P ublic F inance A uthori ty review the Treasurer’s Monthly Investment Report as required by S tate S tatutes. (C T) Recommendation: The following is the Investment Report for the month ending D ecember 31, 2022. This report is provi ded to ensure C ity C ouncil is informed of the D epartment’s investment activities. The report satisfies the recommended reporting requi rements of the C ity of Lynwood, which addresses the C ity C ouncil’s request for monthly financial information. It is recommended that the C ity C ouncil for the C ity of Lynwood receive and file the attac hed Monthly Investment R eport. N E W/OLD B U S IN E S S AD J OU R N ME N T THE LYNW OO D P UB L IC F IN A N C E A UTHO RITY M E E TINGS W IL L B E P OS TE D A S NE E D E D . THE NE X T M E E TING W IL L B E HE L D IN THE C OUNC IL C H A M B E R S OF C ITY HA L L A NNE X , 11350 B UL L IS R OA D , C ITY OF LYNW OO D , C A L IF ORNIA . Lynwood Public Financing Authority - Page 2 of 33 A genda I tem # 5. AGENDA STAF F REPORT D AT E: J anuary 17, 2023 TO: Honorable P resident and Members of the P ublic F inance A uthority AP P R OV E D B Y: E rnie Hernandez, C ity Manager P R E PAR E D B Y: S heila Harding, D eputy C ity Treasurer S U B J E C T: TRE A S URE R'S M O N TH LY INV E S TME NT RE P ORT Recommendation: The following is the Investment Report for the month endi ng D ecember 31, 2022. This report is provi ded to ensure C ity C ouncil is i nformed of the D epartment’s investment activi ti es. The report satisfies the recommended reporting requirements of the C i ty of Lynwood, which addresses the C ity C ouncil’s request for monthly fi nancial information. It is recom mended that the C ity C ouncil for the C ity of Lynwood rec eive and file the attached Monthly Investment R eport. Background: Government C ode S ection 53607, last amended 1996, with reference to the reporting of investment transacti ons states that the Treasurer shall make a monthly report of those transacti on to the legislative body. Government C ode S ection 53646 (b) (1), last amended 2004, with reference to discussion related to establishment of an Investment P olicy and i nvestment reporting states that “the Treasurer may render a quarterly report”. To determi ne the applicable code inasmuch as reference to Government C ode S ection 53607 or non-compli ance thereof has never been included i n past audit findings. While Government C ode S ection 53646 (b) (1) which is the most current version related to Investment Reporting utilizes the word “may” indicating the reporting mechanism is optional, to err on the side of caution, and in order to ensure that we are in compliance with all Government C odes, a new procedure of submitting monthly reports to the C ouncil/A gency agenda was implemented. A ttached for C ouncil/A gency revi ew is the C ity’s/A gency’s Monthly Treasurer ’s Report. Discussion and Analysis: The investment transactions were executed i n accordance with the C ity's Investment P olicy and the C ali forni a S tate Government C ode S ection 5346(b)(3) that requires the general fund is able to meet its expenditure requirements for the next six months. Lynwood Public Financing Authority - Page 3 of 33 Agenda Item # 2 Fiscal Impact: The action recommended in this report will not have a fiscal impact on the C ity. Coordinated With: F HN F inanci al Main S treet A dvisors currently monitors the C ity’s i nvestment activities. AT TAC H ME N T S: Description AC TIV IT Y & S U MMARY R E P OR T - D E C E MB E R 2022 F H N E C ON OMIC R EPOR T - D E C E MB E R 2022 N R F & C ON F E R EN C E B OAR D GL OB AL - D E C E MB E R 2022 Lynwood Public Financing Authority - Page 4 of 33 Agenda Item # 2 ACTIVITY & PERFORMANCE SUMMARY DECEMBER 2022 1 The following is the City’s cash flow and the monthly investment report. The monthly report includes a summary of the City’s investment portfolio, a monthly review of the investment market as prepared by the investment managers and detailed information on monthly transactions, cash flows and investments by issuer. FHN Investment Advisors manage the portion of investments not invested by LAIF (State Local Agency Investment Fund). The tables below provide key statistics regarding the City’s cash flow and investment portfolio as of December 31, 2022. Type Balances Held Cash - US Bank $48,689,265.10 Cash - JPMorgan Chase Bank $8,056,091.92 Local Agency Investment Fund $9,595,678.13 FHN Investment Advisors/BNY 25,744,440 .91 TOTAL $66,341,035.15 FHN ACCOUNT SUMMARY 31-Dec 30- Nov Market Value $35,344,239 $35,314,063 Book Value $36,481,176 $36,466,189 Variance (1,136,936) ($1,152,126) Par Value $36,500,250 $36,492,754 Net Asset Value $96.88 $96.84 Book Yield 2.38% 2.35% Market Yield 3.95% 3.88% Years to Maturity 1.69 1.75 Effective Duration 1.45 1.45 FHN INVESTMENT COMPLIANCE % % Company Book Value of Portfolio Allowed by Policy US Treasuries 6,499,374.86 17.82% 100% US Federal Agencies 10,450,169.07 28.65% 100% Supranational Obligations $0.00 0% 30% LAIF 9,595,678.13 26.30% 75% Commercial Paper 1,478,968.63 4.05% 25% Money Market Funds 52,571.67 0.14% 20% Negotiable Certificates of Deposit 4,915,622.91 13.47% 30% Lynwood Public Financing Authority - Page 5 of 33 Agenda Item # 2 ACTIVITY & PERFORMANCE SUMMARY DECEMBER 2022 2 Corporate Obligations 3,488,790.30 9.56% 30% State and Local Governments $0.00 0% 100% Total 36,481,175.57 100.00% All of the City’s rated investments were rated “A” or higher by at least two rating agencies on December 2022. The City’s investments comply with its current investment policy, which emphasizes the safety, liquidity, and return of its investments, allowing the city to meet its expenditures for the next six months. PURCHASES & MATURITIES No Purchases or Redemptions for the month of December 2022. FHN INCOME EARNED SUMMARY December Month End Fiscal Year to Date INTEREST Interest Received/Purchased. 7,495.34 191,919.53 Plus Accrued Interest at End of Period 165,558.38 165,558.38 Less Accrued Interest at Beginning of Period -124,829.88 -74,680.06 Interest Earned During Period 48,223.84 282,797.85 Total Adjustments for Amortization/Accretion 7,491.20 25,036.43 Total Capital Gains or Losses 0.00 0.00 Total Earnings During Period 55,715.04 307,834.28 Lynwood Public Financing Authority - Page 6 of 33 Agenda Item # 2 Quarterly Economic and Market Update December 2022 Lynwood Public Financing Authority - Page 7 of 33 Agenda Item # 2 Economic and Market Update *Estimates for the current quarter/month, some data are lagged Sources: FHN Main Street and Bloomberg Case-Shiller Home Prices YOY*8.6%16.0%(7.4%) Consumer Confidence 108.3 103.2 5.1 Gold (per ounce)$1,824.02 $1,660.61 $163.41 Dollar Index 103.52 112.12 (8.60) U.S. Avg Regular Unleaded $3.21 $3.80 ($0.59) Retail Sales YOY*8.7%8.4%0.3% S&P 500 3,840 3,586 7.1% Consumer Price Index YOY*7.6%8.2%(0.6%) 1-5 Yr A-AAA Corporate Spread 0.69%0.81%(0.12%) Dow Jones 33,147 28,726 15.4% 30 Year Mortgage Rate 6.66%5.83%0.83% 1-5 Yr Agency Spread 0.07%0.03%0.04% 10 Year T-Note 3.88%3.83%0.04% U.S. Fed Debt Avg Yield*2.30%1.99%0.31% 3 Year T-Note 4.23%4.29%(0.06%) 5 Year T-Note 4.01%4.09%(0.09%) 2 Year T-Note 4.43%4.28%0.15% 3 Month T-Bill 4.37%3.27%1.10% Labor Force Participation 62.3%62.3%0.0% Effective Fed Funds Rate 4.33%3.08%1.25% U.S. Payrolls Monthly Change 223,000 269,000 (46,000) Unemployment Rate 3.5%3.5%0.0% 12/31/2022 Item 12/31/2022 9/30/2022 Change 2Lynwood Public Financing Authority - Page 8 of 33 Agenda Item # 2 Economic and Market Update * Real Rate (Inflation Adjusted) Source: Bureau of Economic Analysis Estimate: Bloomberg's Survey of Economists As of: 12/31/2022 12/31/2022 -1.4 5.2 4.7 1.8 3.3 2.3 1.3 0.6 2.4 1.2 2.4 2.0 1.7 2.0 3.4 4.1 2.8 2.8 2.9 0.7 2.2 2.7 3.6 1.8 -4.6 -29 . 9 35 . 3 3.9 6.3 7.0 2.7 7.0 -1.6 -0.6 3.2 1.1 0.0 -0.6 0.0 -45 -35 -25 -15 -5 5 15 25 35 45 Q1 2 0 1 4 Q2 2 0 1 4 Q3 2 0 1 4 Q4 2 0 1 4 Q1 2 0 1 5 Q2 2 0 1 5 Q3 2 0 1 5 Q4 2 0 1 5 Q1 2 0 1 6 Q2 2 0 1 6 Q3 2 0 1 6 Q4 2 0 1 6 Q1 2 0 1 7 Q2 2 0 1 7 Q3 2 0 1 7 Q4 2 0 1 7 Q1 2 0 1 8 Q2 2 0 1 8 Q3 2 0 1 8 Q4 2 0 1 8 Q1 2 0 1 9 Q2 2 0 1 9 Q3 2 0 1 9 Q4 2 0 1 9 Q1 2 0 2 0 Q2 2 0 2 0 Q3 2 0 2 0 Q4 2 0 2 0 Q1 2 0 2 1 Q2 2 0 2 1 Q3 2 0 2 1 Q4 2 0 2 1 Q1 2 0 2 2 Q2 2 0 2 2 Q3 2 0 2 2 Q4 2 0 2 2 Q1 2 0 2 3 Q2 2 0 2 3 Q3 2 0 2 3 Pe r c e n t U.S. GDP (Quarter over Quarter Annualized)* Estimates 3Lynwood Public Financing Authority - Page 9 of 33 Agenda Item # 2 Economic and Market Update * Real Rate (Inflation Adjusted) Source: Bureau of Economic Analysis 12/31/2022 Estimate: Bloomberg's Survey of Economists As of: 12/31/2022 8.7 8.0 4.1 4.7 -0.6 7.1 2.1 2.1 -0.7 6.9 2.6 2.6 6.1 4.4 5.8 6.5 6.6 2.7 4.9 3.1 0.2 3.3 5.3 5.6 -0.5 -0.2 5.4 4.6 5.5 3.2 -0.3 2.5 -1.8 4.6 7.2 4.2 3.5 3.5 4.2 3.7 1.9 -0.1 3.5 2.8 4.0 2.7 3.8 4.4 4.5 4.8 4.1 1.0 1.7 2.8 3.9 3.5 2.8 2.0 0.1 -2.6 2.7 1.5 2.3 1.8 2.3 2.7 1.7 2.2 2.9 2.3 -2.8 5.9 1.9 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 19 5 0 19 5 2 19 5 4 19 5 6 19 5 8 19 6 0 19 6 2 19 6 4 19 6 6 19 6 8 19 7 0 19 7 2 19 7 4 19 7 6 19 7 8 19 8 0 19 8 2 19 8 4 19 8 6 19 8 8 19 9 0 19 9 2 19 9 4 19 9 6 19 9 8 20 0 0 20 0 2 20 0 4 20 0 6 20 0 8 20 1 0 20 1 2 20 1 4 20 1 6 20 1 8 20 2 0 20 2 2 Pe r c e n t U.S. Annual GDP * 1980s 3.2%1990s 3.2%2000s 1.9%2010s 2.3%1960s 4.5%1970s 3.3%1950s 4.2% 4Lynwood Public Financing Authority - Page 10 of 33 Agenda Item # 2 Economic and Market Update Source: Bureau of Labor Statistics 12 Month Average Job Change 375,250 12/31/2022 -22 -20 -18 -16 -14 -12 -10 -8 -6 -4 -2 0 2 4 6 Ju n - 1 8 Se p - 1 8 De c - 1 8 M a r - 1 9 Ju n - 1 9 Se p - 1 9 De c - 1 9 M a r - 2 0 Ju n - 2 0 Se p - 2 0 De c - 2 0 M a r - 2 1 Ju n - 2 1 Se p - 2 1 De c - 2 1 M a r - 2 2 Ju n - 2 2 Se p - 2 2 De c - 2 2 M i l l i o n s U.S. Monthly Non-Farm Payrolls Change -25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 Ju n - 1 8 Se p - 1 8 De c - 1 8 M a r - 1 9 Ju n - 1 9 Se p - 1 9 De c - 1 9 M a r - 2 0 Ju n - 2 0 Se p - 2 0 De c - 2 0 M a r - 2 1 Ju n - 2 1 Se p - 2 1 De c - 2 1 M a r - 2 2 Ju n - 2 2 Se p - 2 2 De c - 2 2 M i l l i o n s U.S. Monthly Non-Farm Payrolls YOY Change 5Lynwood Public Financing Authority - Page 11 of 33 Agenda Item # 2 Economic and Market Update Source: Bureau of Labor Statistics 12/31/2022 0 5 10 15 20 25 30 Ju n - 1 8 Au g - 1 8 Oc t - 1 8 De c - 1 8 Fe b - 1 9 Ap r - 1 9 Ju n - 1 9 Au g - 1 9 Oc t - 1 9 De c - 1 9 Fe b - 2 0 Ap r - 2 0 Ju n - 2 0 Au g - 2 0 Oc t - 2 0 De c - 2 0 Fe b - 2 1 Ap r - 2 1 Ju n - 2 1 Au g - 2 1 Oc t - 2 1 De c - 2 1 Fe b - 2 2 Ap r - 2 2 Ju n - 2 2 Au g - 2 2 Oc t - 2 2 De c - 2 2 Pe r c e n t Unemployment Rates U.S.A Nevada California Idaho Washington Hawaii Oregon Utah 6Lynwood Public Financing Authority - Page 12 of 33 Agenda Item # 2 Economic and Market Update Source: Bureau of Labor Statistics 12/31/2022 128 130 132 134 136 138 140 142 144 146 148 150 152 154 156 De c - 1 2 Ju l - 1 3 Fe b - 1 4 Se p - 1 4 Ap r - 1 5 No v - 1 5 Ju n - 1 6 Ja n - 1 7 Au g - 1 7 M a r - 1 8 Oc t - 1 8 M a y - 1 9 De c - 1 9 Ju l - 2 0 Fe b - 2 1 Se p - 2 1 Ap r - 2 2 No v - 2 2 M i l l i o n s U.S. Number of Employed Full-Time and Part-Time 60.0 60.5 61.0 61.5 62.0 62.5 63.0 63.5 64.0 De c - 1 2 Ju l - 1 3 Fe b - 1 4 Se p - 1 4 Ap r - 1 5 No v - 1 5 Ju n - 1 6 Ja n - 1 7 Au g - 1 7 M a r - 1 8 Oc t - 1 8 M a y - 1 9 De c - 1 9 Ju l - 2 0 Fe b - 2 1 Se p - 2 1 Ap r - 2 2 No v - 2 2 Pe r c e n t U.S. Labor Force Participation Rate 7Lynwood Public Financing Authority - Page 13 of 33 Agenda Item # 2 Economic and Market Update Source: Department of Labor and Bloomberg 12/31/2022 Weekly Initial Jobless Claims is the actual number of people who have filed for Unemployment benefits for the first time. The following five eligibility criteria must be met in order to file for unemployment benefits: 1. Meet the requirements of time worked during a 1 year period (full time or not). 2. Become unemployed through no fault of your own (cannot be fired). 3. Must be able to work; no physical or mental holdbacks. 4. Must be available for work. 5. Must be actively seeking work. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 19 9 6 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 20 0 4 20 0 5 20 0 6 20 0 7 20 0 8 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 M i l l i o n s Weekly Initial Jobless Claims (4 Week Moving Average) 8Lynwood Public Financing Authority - Page 14 of 33 Agenda Item # 2 Economic and Market Update *Real: Inflation Adjusted Source: U.S. Census Bureau Source: Conference Board 12/31/2022 -30 -20 -10 0 10 20 30 40 50 60 Ju n - 1 8 Se p - 1 8 De c - 1 8 M a r - 1 9 Ju n - 1 9 Se p - 1 9 De c - 1 9 M a r - 2 0 Ju n - 2 0 Se p - 2 0 De c - 2 0 M a r - 2 1 Ju n - 2 1 Se p - 2 1 De c - 2 1 M a r - 2 2 Ju n - 2 2 Se p - 2 2 Pe r c e n t U.S. Real* Retail Sales YOY % Change 40 50 60 70 80 90 100 110 120 130 140 Ju n - 1 2 De c - 1 2 Ju n - 1 3 De c - 1 3 Ju n - 1 4 De c - 1 4 Ju n - 1 5 De c - 1 5 Ju n - 1 6 De c - 1 6 Ju n - 1 7 De c - 1 7 Ju n - 1 8 De c - 1 8 Ju n - 1 9 De c - 1 9 Ju n - 2 0 De c - 2 0 Ju n - 2 1 De c - 2 1 Ju n - 2 2 De c - 2 2 In d e x V a l u e U.S. Consumer Confidence 9Lynwood Public Financing Authority - Page 15 of 33 Agenda Item # 2 Economic and Market Update CPIX: Consumer Price Index, excluding food and energy PCEC: Personal Consumption Expenditure Core Source: Bureau of Labor Statistics and Bureau of Economic Analysis 12/31/2022 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Ju n - 1 8 Se p - 1 8 De c - 1 8 M a r - 1 9 Ju n - 1 9 Se p - 1 9 De c - 1 9 M a r - 2 0 Ju n - 2 0 Se p - 2 0 De c - 2 0 M a r - 2 1 Ju n - 2 1 Se p - 2 1 De c - 2 1 M a r - 2 2 Ju n - 2 2 Se p - 2 2 Pe r c e n t CPI and CPIX YOY % Change CPI CPIX 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Ju n - 1 8 Se p - 1 8 De c - 1 8 M a r - 1 9 Ju n - 1 9 Se p - 1 9 De c - 1 9 M a r - 2 0 Ju n - 2 0 Se p - 2 0 De c - 2 0 M a r - 2 1 Ju n - 2 1 Se p - 2 1 De c - 2 1 M a r - 2 2 Ju n - 2 2 Se p - 2 2 Pe r c e n t PCE and PCEC YOY % Change PCE PCEC 10Lynwood Public Financing Authority - Page 16 of 33 Agenda Item # 2 Economic and Market Update Sources: New (U.S. Census Bureau),Existing (National Assoc. of Realtors) Source: Case-Shiller Seasonally Adjusted Annual Rate 12/31/2022 0 2 4 6 8 10 12 14 16 18 20 22 24 Ju l - 1 4 De c - 1 4 M a y - 1 5 Oc t - 1 5 M a r - 1 6 Au g - 1 6 Ja n - 1 7 Ju n - 1 7 No v - 1 7 Ap r - 1 8 Se p - 1 8 Fe b - 1 9 Ju l - 1 9 De c - 1 9 M a y - 2 0 Oc t - 2 0 M a r - 2 1 Au g - 2 1 Ja n - 2 2 Ju n - 2 2 YO Y P e r c e n t Case-Shiller 20 City U.S. Home Price Index YOY % Increase 200 300 400 500 600 700 800 900 1,000 1,100 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 Ju n - 1 4 De c - 1 4 Ju n - 1 5 De c - 1 5 Ju n - 1 6 De c - 1 6 Ju n - 1 7 De c - 1 7 Ju n - 1 8 De c - 1 8 Ju n - 1 9 De c - 1 9 Ju n - 2 0 De c - 2 0 Ju n - 2 1 De c - 2 1 Ju n - 2 2 Ne w -Th o u s a n d s Ex i s t i n g -M i l l i o n s U.S. New and Existing Home Sales Existing-Left New-Right 11Lynwood Public Financing Authority - Page 17 of 33 Agenda Item # 2 Economic and Market Update Source: U.S. Treasury 12/31/2022 $12 $13 $14 $15 $16 $17 $18 $19 $20 $21 $22 $23 $24 $25 $26 $27 $28 $29 $30 $31 $32 $33 De c - 1 2 Ju n - 1 3 De c - 1 3 Ju n - 1 4 De c - 1 4 Ju n - 1 5 De c - 1 5 Ju n - 1 6 De c - 1 6 Ju n - 1 7 De c - 1 7 Ju n - 1 8 De c - 1 8 Ju n - 1 9 De c - 1 9 Ju n - 2 0 De c - 2 0 Ju n - 2 1 De c - 2 1 Ju n - 2 2 Tr i l l i o n s U.S. Federal Debt Outstanding 1.3 1.5 1.7 1.9 2.1 2.3 2.5 2.7 De c - 1 2 Ju n - 1 3 De c - 1 3 Ju n - 1 4 De c - 1 4 Ju n - 1 5 De c - 1 5 Ju n - 1 6 De c - 1 6 Ju n - 1 7 De c - 1 7 Ju n - 1 8 De c - 1 8 Ju n - 1 9 De c - 1 9 Ju n - 2 0 De c - 2 0 Ju n - 2 1 De c - 2 1 Ju n - 2 2 Pe r c e n t U.S. Treasury Interest Bearing Debt Avg Rate 12Lynwood Public Financing Authority - Page 18 of 33 Agenda Item # 2 Economic and Market Update Fed Funds Anticipated Rate from the September 21, 2022 FOMC Meeting Source: Bloomberg 12/31/2022 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 De c - 2 0 2 2 Ja n - 2 0 2 3 Fe b - 2 0 2 3 M a r - 2 0 2 3 Ap r - 2 0 2 3 M a y - 2 0 2 3 Ju n - 2 0 2 3 Ju l - 2 0 2 3 Au g - 2 0 2 3 Se p - 2 0 2 3 Oc t - 2 0 2 3 No v - 2 0 2 3 De c - 2 0 2 3 Ja n - 2 0 2 4 Fe b - 2 0 2 4 M a r - 2 0 2 4 Ap r - 2 0 2 4 M a y - 2 0 2 4 Ju n - 2 0 2 4 Ju l - 2 0 2 4 Au g - 2 0 2 4 Se p - 2 0 2 4 Oc t - 2 0 2 4 No v - 2 0 2 4 De c - 2 0 2 4 Ja n - 2 0 2 5 Fe b - 2 0 2 5 M a r - 2 0 2 5 Ap r - 2 0 2 5 M a y - 2 0 2 5 Ju n - 2 0 2 5 Ju l - 2 0 2 5 Au g - 2 0 2 5 Se p - 2 0 2 5 Oc t - 2 0 2 5 No v - 2 0 2 5 De c - 2 0 2 5 Ja n - 2 0 2 6 Pe r c e n t Fed Funds FuturesFed's Anticipated Rates Fed Funds Futures 13Lynwood Public Financing Authority - Page 19 of 33 Agenda Item # 2 Economic and Market Update Source: Bloomberg Figures may not total due to rounding 12/31/2022 3Y 4.23 4.29 -0.06 30Y 3.97 3.78 0.19 5Y 4.01 4.09 -0.09 10Y 4.37 3.88 3.83 0.04 Change9/30/2212/30/22 3M Maturity 0.154.284.432Y 0.723.994.711Y 0.833.934.766M 1.103.27 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 3M 6M 1Y 2Y 3Yr 5Y 10Y 30Y Pe r c e n t U.S. Treasury Yield Curve Change 12/30/22 9/30/22 -20 0 20 40 60 80 100 120 3M 6M 1Y 2Y 3Y r 5Y 10 Y 30 Y Ba s i s P o i n t s Basis Point Change 14Lynwood Public Financing Authority - Page 20 of 33 Agenda Item # 2 Economic and Market Update Source: Bloomberg 12/31/2022 0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 4.00 4.25 4.50 4.75 5.00 De c - 1 7 M a r - 1 8 Ju n - 1 8 Se p - 1 8 De c - 1 8 M a r - 1 9 Ju n - 1 9 Se p - 1 9 De c - 1 9 M a r - 2 0 Ju n - 2 0 Se p - 2 0 De c - 2 0 M a r - 2 1 Ju n - 2 1 Se p - 2 1 De c - 2 1 M a r - 2 2 Ju n - 2 2 Se p - 2 2 De c - 2 2 Pe r c e n t U.S. Treasury Yields: 3M and 1Y 1Y 3M 0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 4.00 4.25 4.50 4.75 De c - 1 7 M a r - 1 8 Ju n - 1 8 Se p - 1 8 De c - 1 8 M a r - 1 9 Ju n - 1 9 Se p - 1 9 De c - 1 9 M a r - 2 0 Ju n - 2 0 Se p - 2 0 De c - 2 0 M a r - 2 1 Ju n - 2 1 Se p - 2 1 De c - 2 1 M a r - 2 2 Ju n - 2 2 Se p - 2 2 De c - 2 2 Pe r c e n t U.S. Treasury Yields: 2Y and 5Y 5Y 2Y 15Lynwood Public Financing Authority - Page 21 of 33 Agenda Item # 2 Economic and Market Update Source: Bloomberg 12/31/2022 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Jan - 5 4 Jan - 5 6 Jan - 5 8 Jan - 6 0 Jan - 6 2 Jan - 6 4 Jan - 6 6 Jan - 6 8 Jan - 7 0 Jan - 7 2 Jan - 7 4 Jan - 7 6 Jan - 7 8 Jan - 8 0 Ja n - 8 2 Jan - 8 4 Jan - 8 6 Jan - 8 8 Jan - 9 0 Jan - 9 2 Jan - 9 4 Jan - 9 6 Jan - 9 8 Jan - 0 0 Jan - 0 2 Jan - 0 4 Jan - 0 6 Ja n - 0 8 Jan - 1 0 Jan - 1 2 Jan - 1 4 Jan - 1 6 Jan - 1 8 Jan - 2 0 Jan - 2 2 Pe r c e n t U.S. Treasury Yields 2Yr and 5Yr -Fed Funds Target Rate 5Yr 2Yr Fed Funds 16Lynwood Public Financing Authority - Page 22 of 33 Agenda Item # 2 Economic and Market Update Source: Bloomberg 12/31/2022 Global Treasury Rates 2 Year Yields 5 Year Yields 10 Year Yields 0.03% 1.22% 2.74% 2.77% 2.83% 2.89% 3.24% 3.40% 3.53% 4.05% 4.43% -2.0%0.0%2.0%4.0% Japan Switzlnd Germany Portugal France Spain Italy Australia England Canada USA 0.23% 1.42% 2.57% 2.87% 2.95% 3.14% 3.41% 3.60% 3.68% 4.00% 4.00% -1.0%1.0%3.0%5.0% Japan Switzlnd Germany France Portugal Spain Canada England Australia Italy USA 0.41% 1.58% 2.57% 3.11% 3.30% 3.58% 3.65% 3.66% 3.87% 4.05% 4.70% 0.0%1.0%2.0%3.0%4.0%5.0% Japan Switzlnd Germany France Canada Portugal Spain England USA Australia Italy 17Lynwood Public Financing Authority - Page 23 of 33 Agenda Item # 2 Economic and Market Update ICE BofAML Index (option adjusted spread vs. Treasury)ICE BofAML Index (option adjusted spread vs. Treasury) 1-5Yr Non-Callable Agency (GVPB)Corporate A-AAA Excluding Yankee (CVAC) Source: ICE BofAML Indices 12/31/2022 Current Spread is 7 Current Spread is 69 -20 0 20 40 60 80 100 120 140 160 180 No v - 0 8 No v - 0 9 No v - 1 0 No v - 1 1 No v - 1 2 No v - 1 3 No v - 1 4 No v - 1 5 No v - 1 6 No v - 1 7 No v - 1 8 No v - 1 9 No v - 2 0 No v - 2 1 No v - 2 2 Ba s i s P o i n t s Spread: 1-5Yr Agency vs Treasury 0 50 100 150 200 250 300 350 400 450 500 550 600 650 No v - 0 8 No v - 0 9 No v - 1 0 No v - 1 1 No v - 1 2 No v - 1 3 No v - 1 4 No v - 1 5 No v - 1 6 No v - 1 7 No v - 1 8 No v - 1 9 No v - 2 0 No v - 2 1 No v - 2 2 Ba s i s P o i n t s Spread: 1-5Yr A-AAA Corporate vs Treasury 18Lynwood Public Financing Authority - Page 24 of 33 Agenda Item # 2 Economic and Market Update *ICE BofAML Index (option adjusted spread vs. Treasury)*ICE BofAML Index (option adjusted spread vs. Treasury) AAA Rated ABS (R0A1)CMO Agency 0-3Yr PAC (CM1P) Source: ICE BofAML Indices 12/31/2022 Current Spread is 88 Current Spread is 71 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 No v - 0 8 No v - 0 9 No v - 1 0 No v - 1 1 No v - 1 2 No v - 1 3 No v - 1 4 No v - 1 5 No v - 1 6 No v - 1 7 No v - 1 8 No v - 1 9 No v - 2 0 No v - 2 1 No v - 2 2 Ba s i s P o i n t s Spread: AAA Asset Backed vs Treasury -150 -100 -50 0 50 100 150 200 250 300 No v - 0 8 No v - 0 9 No v - 1 0 No v - 1 1 No v - 1 2 No v - 1 3 No v - 1 4 No v - 1 5 No v - 1 6 No v - 1 7 No v - 1 8 No v - 1 9 No v - 2 0 No v - 2 1 No v - 2 2 Ba s i s P o i n t s Spread: 0-3Yr Agency CMO vs Treasury 19Lynwood Public Financing Authority - Page 25 of 33 Agenda Item # 2 Economic and Market Update Source: Bloomberg 12/31/2022 -7.0 -1.9 -0.1 0.6 0.7 0.9 1.6 1.9 2.0 2.4 4.3 4.7 4.8 7.4 7.6 8.6 9.0 9.7 10.8 15.8 15.9 17.7 (10) (5) 0 5 10 15 20 Pe r c e n t Selected Sector Quarterly Total Returns 20Lynwood Public Financing Authority - Page 26 of 33 Agenda Item # 2 Economic and Market Update Source: Bloomberg 12/31/2022 -32.6 -31.2 -26.2 -21.9 -21.2 -18.2 -18.0 -16.2 -15.2 -14.4 -13.1 -13.0 -12.2 -12.2 -7.0 -5.6 -3.9 -0.6 0.9 9.5 17.5 29.0 (40) (30) (20) (10) 0 10 20 30 40 Pe r c e n t Selected Sector Year-Over-Year Total Returns 21Lynwood Public Financing Authority - Page 27 of 33 Agenda Item # 2 Economic and Market Update Sources: Bloomberg, FHN Main Street 12/31/2022 3.50 3.60 3.70 3.80 3.90 4.00 4.10 4.20 4.30 4.40 4.50 9/ 3 0 / 2 2 10 / 3 / 2 2 10 / 6 / 2 2 10 / 9 / 2 2 10 / 1 2 / 2 2 10 / 1 5 / 2 2 10 / 1 8 / 2 2 10 / 2 1 / 2 2 10 / 2 4 / 2 2 10 / 2 7 / 2 2 10 / 3 0 / 2 2 11 / 2 / 2 2 11 / 5 / 2 2 11 / 8 / 2 2 11 / 1 1 / 2 2 11 / 1 4 / 2 2 11 / 1 7 / 2 2 11 / 2 0 / 2 2 11 / 2 3 / 2 2 11 / 2 6 / 2 2 11 / 2 9 / 2 2 12 / 2 / 2 2 12 / 5 / 2 2 12 / 8 / 2 2 12 / 1 1 / 2 2 12 / 1 4 / 2 2 12 / 1 7 / 2 2 12 / 2 0 / 2 2 12 / 2 3 / 2 2 12 / 2 6 / 2 2 12 / 2 9 / 2 2 Pe r c e n t 5 Year Treasury Note Yield Yields Higher After Bank Of Japan Raises Cap On 10-Year Japan Government Bonds Core CPI Up 0.6% Month Over Month Fed Hikes Rates 75bpsUnemployment Rate Dropped To 3.5%, The Lowest Level In Decades Q3 GDP Up 2.6% Powell Says Fed May Slow Down Pace Of Rate Hikes Treasuries Post Biggest Annual Loss Ever, As Inflation Takes Toll CPI YoY Up 7.1% Versus Expected 7.3%, Beating Expectations San Francisco Fed's Daly Says Rate Pause Is Off The Table October CPI 0.4% MoM Core 0.3% 22Lynwood Public Financing Authority - Page 28 of 33 Agenda Item # 2 Economic and Market Update Sources: Bloomberg, FHN Financial, FHN Main Street 12/31/2022 28,000 29,000 30,000 31,000 32,000 33,000 34,000 35,000 9/ 3 0 / 2 2 10 / 3 / 2 2 10 / 6 / 2 2 10 / 9 / 2 2 10 / 1 2 / 2 2 10 / 1 5 / 2 2 10 / 1 8 / 2 2 10 / 2 1 / 2 2 10 / 2 4 / 2 2 10 / 2 7 / 2 2 10 / 3 0 / 2 2 11 / 2 / 2 2 11 / 5 / 2 2 11 / 8 / 2 2 11 / 1 1 / 2 2 11 / 1 4 / 2 2 11 / 1 7 / 2 2 11 / 2 0 / 2 2 11 / 2 3 / 2 2 11 / 2 6 / 2 2 11 / 2 9 / 2 2 12 / 2 / 2 2 12 / 5 / 2 2 12 / 8 / 2 2 12 / 1 1 / 2 2 12 / 1 4 / 2 2 12 / 1 7 / 2 2 12 / 2 0 / 2 2 12 / 2 3 / 2 2 12 / 2 6 / 2 2 12 / 2 9 / 2 2 Dow Jones Industrial Average Sales Forecast By Best Buy Dampens Concerns High Inflation Would Lead To Poor Holiday Shopping Season Upbeat Corporate Earnings And Economic Data Cause Stocks To Rally August Job Openings Fall To 14- Month Low Powell Says Fed Could Slow Down Pace Of Interest Rate Hikes As Early As December University Of Michigan Inflation Expectations Rise For First Time In Seven Months Lower Than Expected October CPI Raises Hopes For Slower Tightening Apple Gains On Earnings Help Push Stocks Higher Smaller Than Expected Increase In CPI Lifts Investor Confidence Pace Of Rate Hikes Expected To Slow 23Lynwood Public Financing Authority - Page 29 of 33 Agenda Item # 2 Disclosure This report represents the opinions of FHN Financial Main Street Advisors, LLC and should not be considered predictive of any future market performance. 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NEITHER ICE DATA, ITS AFFILIATES OR THEIR RESPECTIVE THIRD PARTY PROVIDERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE QUALITY, ADEQUACY, ACCURACY, TIMELINESS OR COM PLETENESS OF THE INDICES OR THE INDEX DATA OR ANY COMPONENT THEREOF, AND THE INDICES AND INDEX DATA AND ALL COMPONENTS THEREOF ARE PROVIDED ON AN "AS IS" BASIS AND SUBSCRIBER'S USE IS AT SUBSCRIBER'S OWN RISK. ICE DATA, ITS AFFILIATES AND THEIR RESPECTIVE THIRD PARTY DO NOT SPONSOR, ENDORSE, OR RECOMMEND FHN FINANCIAL MAIN STREET ADVISORS, LLC, OR ANY OF ITS PRODUCTS OR SERVICES. 24Lynwood Public Financing Authority - Page 30 of 33 Agenda Item # 2 1 MONTHLY ECONOMIC REVIEW DECEMBER 2022 NATIONAL RETAIL FEDERATION After two straight quarters of year-over-year decline, the third quarter’s 2.6% annualized growth in gross domestic product was a solid improvement and much better than expected. The third quarter’s results clearly dispelled the notion that the U.S. economy is in a recession, and the silver lining was the ongoing resiliency in consumption. Even though consumers made fewer purchases, they continued to spend on both goods and services and helped lift GDP. A strong labor market, rising wages and access to excess savings built up during the pandemic have given households strong balance sheets that have helped spending continue despite inflation and higher interest rates. Nonetheless, the economy is cooling and interest-sensitive sectors, in particular, have seen a significant pullback in spending. This has been especially notable in housing, where the Federal Reserve's aggressive efforts to rein in inflation have resulted in a sharp rise in mortgage rates that have left many potential buyers unable to afford a home. Correspondingly, builder confidence in the market for newly built single-family homes posted its 11th straight monthly decline in November and builders are cutting back on single-family construction. GDP is expected to grow very gradually in the closing months of 2022, at best about half of what was recorded in the third quarter. Consumers are stepping back to a degree and changing how they allocate their resources, spending more on food and less on other retail goods. At the same time, spending on services has been hearty in recent months and there is no reason to expect that it will moderate even with the continued upward pace of service sector inflation. Even with inflation, the willingness to spend has been stable for the better part of this year, with retail sales growing 7.5% year over year for the first 10 months. That is on track with NRF’s forecasts that overall, 2022 retail sales and November-December holiday sales will both grow between 6% and 8% over 2021. The pace slowed to 6.5% in October, but that was largely due to the comparison against strong early holiday shopping in 2021. Many eyes have focused on October’s inflation data, and a range of measures was better than expected. The big questions are whether inflation has peaked, and will it be coming down? The Consumer Price Index was up 7.7% year over year, down from 8.2% in September for the lowest inflation level since January. At the same time, core inflation (which excludes food and energy) was at 6.3%, down from September’s 40-year high of 6.6%. Meanwhile, average hourly earnings for October were up 4.7% year over year compared with 5% in September, also sending a message that inflation may be receding. While these changes were all in the right direction, it is too soon to see if they are the beginning of a stable downward trend. Overall job growth has clearly slowed since the start of the year, but labor demand is not cooling as quickly as the Fed – and markets – would like. Additions are moderating but job openings bounced back in September to 10.7 million from 10.3 million in August. The labor market eased somewhat in October as payrolls increased by 261,000. Lynwood Public Financing Authority - Page 31 of 33 Agenda Item # 2 2 It is hard to anticipate whether the Fed’s monetary tightening will lead to a recession or how bad one might be if it does occur. The risk is clearly elevated by the current framework of rate hikes, but the full effects remain to be seen and one key is how much slowing in the labor market is needed to bring wage growth in line with the Fed’s long-run inflation goals. As the labor market slows further, as expected in 2023, income growth should slow with it. The good news is that slower job gains should sap momentum from both consumer spending and rising labor costs, hopefully reducing inflationary pressure. Even though both may slow, employment will still be growing, and consumer spending should remain positive. There will be economic hardships, and some may feel like they are in a recession. But for those who have jobs and feel secure about their employment, careful spending will continue. The downside risk is that “sticky” wages and prices for services – both tend to stay up once they go up – will keep inflation aloft and push the Fed to hold rates higher for longer. So, what does this all mean? The slowdown in economic growth in 2022 combined with the expansion in the labor market have clearly helped bring economic activity in better balance with labor. But there is a long journey ahead between where we are now and where we need to be. If inflation pressures continue to lessen, the Fed may not be inclined to persist with aggressive interest rate hikes, but that remains to be seen. In the meantime, if prices for gas, groceries and other products decelerate, we will all be able to breathe a little easier. CONFERENCE BOARD GLOBAL ECONOMIC REPORT Global real GDP growth is slowing rapidly, from 5 percent year over year in Q3 of 2021 to 3.3 percent in Q3 of 2022. As headwinds to global growth are intensifying, we expect yearly global GDP growth to moderate further to about 2 percent from Q4 2022 onward. Headwinds include persistent inflationary pressures limiting demand and production, very rapid tightening of global financial conditions, and low levels of business and consumer confidence in large economies around the world. The Conference Board Global Leading Economic Index has contracted for a couple of months now, pointing to rising risks of a downturn. Our forecast for global GDP is for 3.2 percent growth in 2022 and 2.1 percent in 2023. Global growth of 2.1 percent does not formally constitute a global recession, but if achieved it would be the weakest growth rate since 2001 (outside of global recession years 2009 and 2020). In 2024, the global economy likely will experience a modest revival to 2.7 percent growth as shocks related to the pandemic, inflation, and monetary tightening fade. However, growth rates in 2024 After growing by an estimated 1.9 percent in 2022, real GDP is forecast to stagnate for the full year of 2023 and pick up again in 2024 with 1.7 percent growth. Europe Europe has likely entered into recession as of Q4 2022 and probably will remain so into the early part of 2023. European economies expected to experience recession include large economies such as Italy, Germany, and the UK, as well as smaller economies such as Czech Republic, Denmark, Hungary, Poland, Romania, Sweden, and Switzerland. CEO confidence fell to an all-time low in H2 2022, reflecting the Lynwood Public Financing Authority - Page 32 of 33 Agenda Item # 2 3 challenging outlook ahead. Still, a variety of factors including fading supply chain woes, a robust labor market, and fiscal stimulus portend a short and shallow recession. After growing by an estimated 3.5 percent in 2022, real GDP is forecast to slow to 0.2 percent growth for the full year of 2023 and pick up again in 2024 with 1.1 percent growth. China The Chinese economy has been buffeted by significant challenges from the pandemic, housing, and external trade in 2022. Businesses and consumers chafed at mobility restrictions and lockdowns, and the government has responded by softening its dynamic zero-COVID-19 policies. Confidence among multinational company CEOs improved in H2 2022 in anticipation of better economic performance in 2023. Still, China is not ready to fully shift away from the polices, given low vaccination rates among the elderly and widespread fear of the virus among the general population. Even once restrictions are lifted, there will be an adjustment period as the fear factor subsides. This points to H2 2023 as the period for a resurgence of consumer spending on services, limiting full-year 2023 growth. After growing by an estimated 2.7 percent in 2022, real GDP is forecast to pick up to 5.1 percent growth for the full year of 2023 and 4.8 percent for 2024. Emerging Markets Economic conditions for economies outside China, Europe, and the US are expected to be mixed. While Asian economies apart from China have fared well from reopening, postpandemic, slowing external demand as the US and Europe head toward recession is beginning to cloud growth prospects. The same is true for Latin American economies dependent upon trade with the US and in commodities, whose prices have retreated from early-year peaks. Tighter monetary policy and political instability threatening fiscal outlooks are also troubling select Latin American economies. Elsewhere, Turkey will experience materially slower growth in 2023, but it will avoid recession. Russia and Ukraine will remain in recession due to the ongoing conflict, sanctions (Russia), and widespread destruction (Ukraine). Lynwood Public Financing Authority - Page 33 of 33 Agenda Item # 2