quarterly investment report - ada county, idaho...senior portfolio manager 702-575-6655...

Client Management Team

Rick Phillips President & Chief Investment Officer 702-575-6666 [email protected]

Tonya Dazzio Chief Operating & Compliance Officer 702-575-6592 [email protected]

Greg Balls, CFA Senior Portfolio Manager 702-575-6655 [email protected]

Dan Rusk Portfolio Manager 702-575-6633 [email protected]

Christine Wilson Operations Analyst 702-575-6640 [email protected]

Ruth Phillips Financial Analyst 702-575-6600 [email protected]

Ada County

September 2019

10655 Park Run Drive Suite 120 | Las Vegas, NV 89144 | Toll Free 888.278.7350 | www.FTNMainStreet.com

Quarterly Investment Report

Portfolio Summary

State of Idaho LGIPUS Bank Money Marker

Market Value Federal Home Loan BankBook Value* Federal Home Loan Mtg CorpVariance Federal Farm Credit Bank

U.S. TreasuryPar Value SunWest Bank MMKT Checking

Zions BankNet Asset Value Federal National Mtg Assn

State Of Idaho DBF TRPurchase Yield Ada & Canyon School Districts

Ada CountyYears to Maturity Univesity of Idaho

Modified Duration

*Book Value is at Original Cost, Not Amortized

#Sector Allocation Key: Agy=Federal Agencies, CD=Cert of Deposit, DBF= State Diversifed Bond Fund, LGIP=State Pool, Mkt Act=Bank Mkt Acct, MMF=Money Mkt Acct, Muni=Municipals, Tsy=Treasuries

$119,183 $116,590

$189,603,496 $181,168,092

$100.063 $100.064

9/30/19 6/30/19

$189,826,027 $181,261,246 $189,706,844 $181,144,656

3.1% 2.8% 2.6% 2.3% 2.3% 0.5% 0.1% 0.0%

56.1% 9.6% 7.7% 6.9% 6.1%

ACCOUNT SUMMARY PORTFOLIO PURCHASE YIELD HISTORY TOP ISSUERS

Issuer % Portfolio

9/30/2019

SECTOR ALLOCATION# MATURITY DISTRIBUTION CREDIT QUALITY (MOODY'S)

Ada County

2.20% 2.35%

0.44 0.55

0.41 0.52

Agy22.9%

Muni0.7%

Tsy3.1%

LGIP56.1%

DBF2.3%

Zions2.6%

Mkt Acct12.3% 81.3%

11.4%6.1%

0.0% 1.1% 0.1%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0-1Y 1-2Y 2-3Y 3-4Y 4-5Y 5+Y

56.1%

2.3%

2.6%

2.8%

0.0%

0.1%

0.0%

0.0%

0.0%

0.0%

36.0%

0.0%

0% 20% 40% 60% 80%

NR-LGIP

NR-DBF

NR-Zions

NR-Bank

NR-CD

NR-Ada Co

NR

Aa3

Aa2

Aa1

Aaa

P-1

2.05%

2.10%

2.15%

2.20%

2.25%

2.30%

2.35%

2.40%

Oct

-18

No

v-1

8

De

c-1

8

Jan

-19

Feb

-19

Mar

-19

Ap

r-1

9

May

-19

Jun

-19

Jul-

19

Au

g-1

9

Sep

-19

NR: Not RatedPer Book ValuePer Book Value

Per Book Value

2

Investment Policy Compliance

0.44 Yrs

2.6%

0.7%

2.3%

22.9%

56.1%

9.6%

0.0%

2.8%

0.0%

FTN Financial Main Street Advisors relies on the accuracy of the data provided by Ada County to compile this report.

Yes:50% limit, maximum maturity 5 years. Domiced in the United State, must fall withing FDIC limit. Deposit Accounts in State/Federal

Credit Unions

Collateralized Business Market

Banking Accounts/Time Deposits-

State Depositories

Yes:No limit, maximum maturity 5 years.

Yes:

U.S. Federal Agencies

Idaho Diversified Bond Fund (DBF)

Idaho Local Govt Investment Pool

30% limit,15% issuer limit, maximum maturity 90 days, allowable collateral at 102% of investment,

transacted with Federal Reserve Primary Dealers with rating of A-1, P-1, or F1

Idaho Public Corporations

Repurchase Agreements

Municipal Securities

20% limit, 5% issuer limit, rated A or better by 2 of 3 rating agencies (S&P, Moody's, or Fitch).

Money Market Funds

Yes:

Yes:No limit, maximum maturity 5 years.

Maturity Limits

Parameters In Compliance

Yes

Investment Ratings At time of purchase, all investments must have an A (S&P), A2 (Moody's), or A (Fitch) rating or better. Yes

Maturities of investments must not exceed 5 years, unless unanimous consent of the Board of County

Commissioners is given.

Weighted Average Maturity Weighted Average Maturity (WAM) must be less than 3 years.

U.S. Treasuries

Ada County

50% Limit, 50% issuer limit for State of Idaho Bonds. 20% limit, 10% issuer limit for Idaho Counties,

Cities, Districts, and Education bonds.

70% limit, rated AAA (S&P), Aaa (Moody's), or AAA (Fitch).

No limit, issuer limit 50%, maximum maturity 5 years.

9/30/2019

Yes:

Yes:

Yes:

Yes:

Yes:

70% limit.

Yes:

30% limit.

Item / Sector

3.1%

3

Historical Book Values

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Avg

FY 13 $167.8 $162.8 $156.6 $198.3 $191.6 $183.9 $182.8 $171.1 $164.4 $196.7 $186.9 $177.0 $178.3

FY 14 $173.6 $162.2 $160.6 $161.5 $191.5 $191.0 $180.0 $175.3 $176.7 $226.2 $192.9 $183.5 $181.2

FY 15 $169.2 $168.1 $156.7 $230.5 $200.3 $193.3 $184.5 $181.9 $176.8 $234.0 $164.9 $153.3 $184.5

FY 16 $140.7 $137.5 $129.7 $258.6 $179.7 $171.4 $158.5 $154.7 $149.0 $221.6 $174.8 $165.7 $170.2

FY 17 $152.2 $148.7 $139.0 $286.6 $191.5 $183.5 $172.8 $169.5 $161.6 $249.1 $186.8 $177.3 $184.9

FY 18 $165.8 $162.0 $152.4 $336.6 $211.6 $201.8 $198.7 $191.7 $181.2 $296.4 $212.8 $200.9 $209.3

FY 19 $185.5 $179.5 $159.3 $287.0 $213.9 $202.1 $190.5 $184.6 $184.5 $295.9 $209.5 $199.4 $207.6Figures in Millions, Average Daily Balance

9/30/2019 Ada County

$100

$125

$150

$175

$200

$225

$250

$275

$300

$325

$350

Oct

-12

De

c-1

2

Feb

-13

Ap

r-1

3

Jun

-13

Au

g-1

3

Oct

-13

De

c-1

3

Feb

-14

Ap

r-1

4

Jun

-14

Au

g-1

4

Oct

-14

De

c-1

4

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

De

c-1

5

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

De

c-1

6

Feb

-17

Ap

r-1

7

Jun

-17

Au

g-1

7

Oct

-17

De

c-1

7

Feb

-18

Ap

r-1

8

Jun

-18

Au

g-1

8

Oct

-18

De

c-1

8

Feb

-19

Ap

r-1

9

Jun

-19

Au

g-1

9

Mill

ion

s

4

Historical Book Values by Fiscal Year

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Avg

FY 13 $167.8 $162.8 $156.6 $198.3 $191.6 $183.9 $182.8 $171.1 $164.4 $196.7 $186.9 $177.0 $178.3

FY 14 $173.6 $162.2 $160.6 $161.5 $191.5 $191.0 $180.0 $175.3 $176.7 $226.2 $192.9 $183.5 $181.2

FY 15 $169.2 $168.1 $156.7 $230.5 $200.3 $193.3 $184.5 $181.9 $176.8 $234.0 $164.9 $153.3 $184.5

FY 16 $140.7 $137.5 $129.7 $258.6 $179.7 $171.4 $158.5 $154.7 $149.0 $221.6 $174.8 $165.7 $170.2

FY 17 $152.2 $148.7 $139.0 $286.6 $191.5 $183.5 $172.8 $169.5 $161.6 $249.1 $186.8 $177.3 $184.9

FY 18 $165.8 $162.0 $152.4 $336.6 $211.6 $201.8 $198.7 $191.7 $181.2 $296.4 $212.8 $200.9 $209.3

FY 19 $185.5 $179.5 $159.3 $287.0 $213.9 $202.1 $190.5 $184.6 $184.5 $295.9 $209.5 $199.4 $207.6Figures in Millions, Average Daily Balance


$120

$170

$220

$270

$320

$370

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Mill

ion

s

FY 19

FY 18

FY 17

FY 16

FY 15

FY 14

FY 13

5

Purchase YTM Per 6-Month Maturity Intervals

*Based on Book value

4.5 to 5.0+ 5.25% 0.13%

3.5 to 4.0 0.00% 0.00%

4.0 to 4.5 1.95% 1.07%

2.5 to 3.0 1.81% 1.35%

3.0 to 3.5 0.00% 0.00%

1.5 to 2.0 2.13% 6.28%

2.0 to 2.5 1.92% 4.74%

.5 to 1.0 2.20% 7.98%

1.0 to 1.5 1.94% 5.11%

0 to .5 2.25% 73.34%


Years Purchase Yield % of Portfolio*

2.25% 2.20%1.94% 2.13% 1.92%

1.81%1.95%

5.25%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

-0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5

Pu

rch

ase

Yie

ld

Maturity Intervals

Bubble Size = Maturity's % of Portfolio

6

Weighted Average Maturity and Book Yield9/30/2019 Ada County

0.0

0.5

1.0

1.5

2.0

2.5

3.0O

ct-1

2

De

c-1

2

Feb

-13

Ap

r-1

3

Jun

-13

Au

g-1

3

Oct

-13

De

c-1

3

Feb

-14

Ap

r-1

4

Jun

-14

Au

g-1

4

Oct

-14

De

c-1

4

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

De

c-1

5

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

De

c-1

6

Feb

-17

Ap

r-1

7

Jun

-17

Au

g-1

7

Oct

-17

De

c-1

7

Feb

-18

Ap

r-1

8

Jun

-18

Au

g-1

8

Oct

-18

De

c-1

8

Feb

-19

Ap

r-1

9

Jun

-19

Au

g-1

9

Year

s

Weighted Average Maturity History

0.0

0.5

1.0

1.5

2.0

2.5

Oct

-12

De

c-1

2

Feb

-13

Ap

r-1

3

Jun

-13

Au

g-1

3

Oct

-13

De

c-1

3

Feb

-14

Ap

r-1

4

Jun

-14

Au

g-1

4

Oct

-14

De

c-1

4

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

De

c-1

5

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

De

c-1

6

Feb

-17

Ap

r-1

7

Jun

-17

Au

g-1

7

Oct

-17

De

c-1

7

Feb

-18

Ap

r-1

8

Jun

-18

Au

g-1

8

Oct

-18

De

c-1

8

Feb

-19

Ap

r-1

9

Jun

-19

Au

g-1

9

Per

cen

t

Month-End Book Yield vs 0-3Yr Treasury Index (24 month moving avg)*

Portfolio

Index

7

Book Yield per WAM per Percent of Portfolio9/30/2019 Ada County

Agy

LGIP

DBF

Zions*

Muni

Tsy

MMKT

1.8%

1.9%

2.0%

2.1%

2.2%

2.3%

2.4%

2.5%

-1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0

Yie

ld t

o M

atu

rity

Weighted Average Maturity (Years)

Bubble Size = Percent of Portfolio

*Seperately managed account at Zions Wealth Advisors. WAM is greater than 1 day.

8

Interest Rate Shock Analysis

$171,764,256

Portfolio Value Value Change Percent Change

$690,024$503,718$345,012

-$741,776

0.00%

-0.22%

-0.43%

$172,313,170 -$192,862 -0.11%

-$385,723$172,120,309


$173,196,056$173,009,750$172,851,044

0.40%0.29%0.20%

+100 Basis Points

Interst Rate Change

-100 Basis Points-75 Basis Points-50 Basis Points

No Change

-25 Basis Points

+75 Basis Points

+25 Basis Points

+50 Basis Points$171,949,700 -$556,332 -0.32%

$172,678,538 $172,506 0.10%

$0$172,506,032

0.40%

0.29%

0.20%

0.10%

0.00%

-0.11%

-0.22%

-0.32%

-0.43%-0.50%

-0.40%

-0.30%

-0.20%

-0.10%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

-100BP -75BP -50BP -25BP No Change +25BP +50BP +75BP +100BP

Per

cen

t C

han

ge in

Po

rtfo

lio V

alu

e

Interest Rate Changes/Scenarios

Instantaneous Interest Rate Changes and Estimated Changes in Portfolio's Market Value

9

Next Twelve Months Maturities

Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20

$121.0 $0.0 $0.0 $0.0 $0.0 $0.0 $11.5 $0.0 $2.0 $0.5 $1.1 $0.0

Par Value in Millions. The DBF investment is included in the closest month.

9/30/2019

Maturities

Ada County

$121.0

$0.0 $0.0 $0.0 $0.0 $0.0

$11.5

$0.0 $2.0 $0.5 $1.1 $0.0

$0

$20

$40

$60

$80

$100

$120

$140


Mill

ion

s

10

Historical Sector Allocation


Agency 36.8% 36.3% 43.4% 30.1% 30.6% 31.1% 33.0% 31.2% 32.2% 27.3% 23.4% 22.9%

Treasury 3.4% 3.4% 4.1% 2.8% 2.9% 3.1% 3.3% 3.3% 3.3% 2.8% 2.9% 3.1%

State of Idaho DBF 2.4% 2.5% 3.0% 2.1% 2.1% 2.2% 2.4% 2.4% 2.4% 2.1% 2.1% 2.3%

State of Idaho LGIP 50.8% 51.1% 41.3% 59.4% 58.7% 57.5% 54.8% 56.6% 55.6% 62.2% 59.0% 56.1%

Municipals 0.7% 0.7% 0.9% 0.6% 0.6% 0.7% 0.7% 0.7% 0.7% 0.6% 0.6% 0.7%

Zions Account 2.8% 2.9% 3.5% 2.4% 2.4% 2.6% 2.8% 2.8% 2.8% 2.4% 2.5% 2.6%

Business Mkt Acct 3.1% 3.2% 3.8% 2.6% 2.7% 2.8% 3.0% 3.0% 3.0% 2.6% 2.6% 2.8%

Money Market 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 7.0% 9.6%

Total 100.0% 100.1% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Sector


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%


AGY

DBF

LGIP

Zions

Bs Mkt Acct

MMF

Muni

TSY

11

Issuer Allocation9/30/2019 Ada County

0.0%

0.1%

0.5%

2.3%

2.3%

2.6%

2.8%

3.1%

6.1%

6.9%

7.7%

9.6%

56.1%

0% 10% 20% 30% 40% 50% 60%

UNIVERSITY OF IDAHO

Ada County

ADA & CANYON SCHOOL D #2 GEN O

State Of Idaho DBF TR

Federal National Mtg Assn

ZIONS BANK

SUNWEST BANK MMKT CHECKING

U.S. Treasury

Federal Farm Credit Bank

Federal Home Loan Mtg Corp

Federal Home Loan Bank

US BANK MONEY MARKET

STATE OF IDAHO LGIP TR

12

Historical Earnings and Book Rate of Return Performance

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep$173.7 $334.8 $498.5 $662.6 $832.7 $1,009.8 $1,187.5 $1,357.5 $1,531.6 $1,688.2 $1,853.4 $2,005.5$178.2 $360.4 $496.4 $659.7 $812.5 $979.6 $1,133.8 $1,322.4 $1,540.0 $1,685.4 $1,839.0 $1,997.5$178.6 $349.5 $451.2 $539.4 $633.2 $806.4 $963.4 $1,134.5 $1,228.6 $358.4 $282.8 $270.4$75.9 $146.6 $220.6 $342.3 $375.0 $443.7 $585.9 $691.0 $790.5 $907.3 $1,018.2 $1,104.1

$105.0 $202.6 $296.7 $489.1 $623.2 $760.6 $905.5 $1,043.1 $1,172.7 $1,404.4 $1,565.0 $1,749.5$191.8 $373.9 $539.4 $933.0 $1,184.6 $1,460.3 $1,742.6 $2,031.9 $2,340.3 $2,859.5 $3,224.5 $3,571.1$341.4 $655.2 $940.0 $1,508.8 $1,894.6 $2,297.1 $2,669.9 $3,029.7 $3,414.1 $4,016.5 $4,447.7 $4,792.7

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep2.17% 2.15% 2.13% 2.21% 2.23% 2.25% 2.27% 2.27% 2.30% 2.31% 2.32% 2.31%

Custom Benchmark* 2.21% 2.25% 2.29% 2.31% 2.34% 2.36% 2.37% 2.37% 2.38% 2.37% 2.36% 2.35%-0.04% -0.10% -0.16% -0.10% -0.11% -0.11% -0.10% -0.10% -0.08% -0.06% -0.04% -0.04%

*Benchmark: 12 Month Moving Avg of the 0-3 Year Treasury ICE BofAML Index (G1QA)--Average Builds Over the Fiscal Year Period

Ada County

Variance

Book Rate of Rtn

Fiscal YTD ($000)FY 2013

9/30/2019

Fiscal YTD

FY 2014FY 2015FY 2016FY 2017FY 2018FY 2019

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000


Tho

usa

nd

s

Fiscal Year-to-Date Earnings

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

2.0%

2.1%

2.2%

2.3%

2.4%

2.5%


Book Rate of Return vs Benchmark

Portfolio

Benchmark

13

Historical Book Rate of Return Performance

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24

1.15% 1.09% 0.15% 0.65% 0.95% 1.71% 2.31%

0.23% 0.26% 0.37% 0.58% 0.85% 1.61% 2.35%

0.92% 0.83% -0.22% 0.07% 0.10% 0.10% -0.04%

*Benchmark: 12 Month Moving Avg of the 0-3 Year Treasury ICE BofAML Index (G1QA)--Average Builds Over the Fiscal Year Period

Benchmark*

Variance


Fiscal YTD

Portfolio

0.92%0.83%

-0.22%

0.07% 0.10% 0.10%

-0.04%

-0.5%

0.0%

0.5%

1.0%

1.5%


Portfolio vs. Benchmark: Annual Variance

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%


Portfolio vs Benchmark Portfolio

Benchmark

14

Investment Activity

Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-1939 39 38 38 38 38 37 37 39 37 41 36

Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-190 0 0 0 0 0 0 0 4 0 5 01 1 0 0 0 1 0 2 2 1 5 21 1 0 0 0 1 0 2 6 1 10 2

Ada County9/30/2019

Purchases

Total Transactions

Positions

Redemptions

0

10

20

30

40

50

60


Po

siti

on

s

Number of Positions at Month End

0

1

2

3

4

5

6


Nu

mb

er o

f Tr

ansa

ctio

ns

Purchases and Redemptions* (Excluding LGIP, MMF, & Bank Accounts)Purchases

Redemptions

*Redemptions include maturities, calls, and sells

15

Quarterly Economic and Market Update

September 2019

16

Economic and Market Update

*Estimates for the current quarter/month, some data are lagged Sources: FTN Main Street and Bloomberg

9/30/19

Item 9/30/19 6/30/19 Change

U.S. Payrolls Monthly Change 136,000 178,000 (42,000)

Unemployment Rate 3.5% 3.7% (0.2%)

Labor Force Participation 63.2% 62.9% 0.3%

Effective Fed Funds Rate 1.90% 2.40% (0.50%)

2 Year T-Note 1.62% 1.76% (0.13%)

3 Month T-Bill 1.82% 2.09% (0.28%)

3 Year T-Note 1.56% 1.71% (0.15%)

5 Year T-Note 1.55% 1.77% (0.22%)

10 Year T-Note 1.67% 2.01% (0.34%)

U.S. Fed Debt Avg Yield* 2.52% 2.51% 0.01%

30 Year Mortgage Rate 3.72% 3.80% (0.08%)

1-5 Yr Agency Spread 0.05% 0.07% (0.02%)

1-5 Yr A-AAA Corporate Spread 0.44% 0.51% (0.07%)

Dow Jones 26,917 26,600 1.2%

S&P 500 2,977 2,942 1.2%

Consumer Price Index YOY* 2.1% 1.6% 0.5%

U.S. Avg Regular Unleaded $2.66 $2.72 ($0.06)

Retail Sales YOY* 4.2% 3.3% 0.9%

Case-Shiller Home Prices YOY* 2.0% 2.4% (0.4%)

Consumer Confidence 125.1 124.3 0.8

Gold (per ounce) $1,472.49 $1,409.55 $62.94

Dollar Index 99.38 96.13 3.25

17


* Real Rate (Inflation Adjusted)

Source: Bureau of Economic Analysis

Estimate: Bloomberg's Survey of Economists

As of: 9/30/19

9/30/19

2.0

-1.0

2.9

-0.1

4.7

3.2

1.7

0.5

0.5

3.6

0.5

3.2

3.2

-1.1

5.5

5.0

2.3

3.2

3.0

1.3

0.1

2.0

1.9 2

.2

2.0 2

.3

2.2

3.2 3

.5

2.5

3.5

2.9

1.1

3.1

2.0

1.9

1.7

1.7 1.8

-2

-1

0

1

2

3

4

5

6

Q4

20

10

Q1

20

11

Q2

20

11

Q3

20

11

Q4

20

11

Q1

20

12

Q2

20

12

Q3

20

12

Q4

20

12

Q1

20

13

Q2

20

13

Q3

20

13

Q4

20

13

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

14

Q1

20

15

Q2

20

15

Q3

20

15

Q4

20

15

Q1

20

16

Q2

20

16

Q3

20

16

Q4

20

16

Q1

20

17

Q2

20

17

Q3

20

17

Q4

20

17

Q1

20

18

Q2

20

18

Q3

20

18

Q4

20

18

Q1

20

19

Q2

20

19

Q3

20

19

Q4

20

19

Q1

20

20

Q2

20

20

Pe

rce

nt

U.S. GDP (Quarter over Quarter Annualized)*

Estimates

18


* Real Rate (Inflation Adjusted)

Source: Bureau of Economic Analysis

9/30/19

Estimate: Bloomberg's Survey of Economists

As of: 9/30/19

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

.84

.11

.01

.72

.93

.83

.52

.91

.9-0

.1-2

.52

.61

.62

.21

.82

.5 2.9

1.6

2.4

2.9

2.3

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

8

9

19

50

19

52

19

54

19

56

19

58

19

60

19

62

19

64

19

66

19

68

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

20

18

Pe

rce

nt

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%

19


Source: Bureau of Labor Statistics

12 Month Average Job Change 178,917

9/30/19

0

50

100

150

200

250

300

350

400

Mar

-15

Jun

-15

Sep

-15

De

c-1

5

Mar

-16

Jun

-16

Sep

-16

De

c-1

6

Mar

-17

Jun

-17

Sep

-17

De

c-1

7

Mar

-18

Jun

-18

Sep

-18

De

c-1

8

Mar

-19

Jun

-19

Sep

-19

Tho

usa

nd

s

U.S. Monthly Non-Farm Payrolls Change

2

3

4

5

6

7

8

Mar

-15

Jun

-15

Sep

-15

De

c-1

5

Mar

-16

Jun

-16

Sep

-16

De

c-1

6

Mar

-17

Jun

-17

Sep

-17

De

c-1

7

Mar

-18

Jun

-18

Sep

-18

De

c-1

8

Mar

-19

Jun

-19

Sep

-19

Pe

rce

nt

Unemployment RatesNevada

U.S.A

California

Idaho

Washington

Hawaii

20


Source: Bureau of Labor Statistics

9/30/19

128129130131132133134135136137138139140141142143144145146147148149150151152153

Sep

-09

Ap

r-1

0

No

v-1

0

Jun

-11

Jan

-12

Au

g-1

2

Mar

-13

Oct

-13

May

-14

De

c-1

4

Jul-

15

Feb

-16

Sep

-16

Ap

r-1

7

No

v-1

7

Jun

-18

Jan

-19

Au

g-1

9

Mill

ion

s

U.S. Number of EmployedFull-Time and Part-TIme

62.0

62.5

63.0

63.5

64.0

64.5

65.0

65.5

Sep

-09

Ap

r-1

0

No

v-1

0

Jun

-11

Jan

-12

Au

g-1

2

Mar

-13

Oct

-13

May

-14

De

c-1

4

Jul-

15

Feb

-16

Sep

-16

Ap

r-1

7

No

v-1

7

Jun

-18

Jan

-19

Au

g-1

9

Pe

rce

nt

U.S. Labor Force Participation Rate

21


Source: Department of Labor and Bloomberg

9/30/19

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.

200

250

300

350

400

450

500

550

600

650

700

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Tho

usa

nd

s

Weekly Initial Jobless Claims (4 Week Moving Average)

22


*Real: Inflation Adjusted

Source: U.S. Census Bureau Source: Conference Board

9/30/19

-0.6-0.4-0.2

00.20.40.60.8

11.21.41.61.8

22.22.42.62.8

33.23.43.63.8

44.2

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

-17

Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Mar

-19

Jun

-19

Pe

rce

nt

U.S. Real* Retail Sales YOY % Change

20

40

60

80

100

120

140

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Mar

-11

Sep

-11

Mar

-12

Sep

-12

Mar

-13

Sep

-13

Mar

-14

Sep

-14

Mar

-15

Sep

-15

Mar

-16

Sep

-16

Mar

-17

Sep

-17

Mar

-18

Sep

-18

Mar

-19

Sep

-19

Ind

ex

Val

ue

U.S. Consumer Confidence

23


CPIX: Consumer Price Index, excluding food and energy PCEC: Personal Consumption Expenditure Core

Source: Bureau of Labor Statistics and Bureau of Economic Analysis

9/30/19

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

-17

Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Mar

-19

Jun

-19

Pe

rce

nt

CPI and CPIX YOY % Change

CPI CPIX

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

-17

Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Mar

-19

Jun

-19

Pe

rce

nt

PCE and PCEC YOY % ChangePCE PCEC

24


Sources: New (U.S. Census Bureau),Existing (National Assoc. of Realtors)

Source: Case-Shiller Seasonally Adjusted Annual Rate

9/30/19

-6

-4

-2

0

2

4

6

8

10

12

14

Ap

r-1

1

Sep

-11

Feb

-12

Jul-

12

Dec

-12

May

-13

Oct

-13

Mar

-14

Au

g-1

4

Jan

-15

Jun

-15

No

v-1

5

Ap

r-1

6

Sep

-16

Feb

-17

Jul-

17

Dec

-17

May

-18

Oct

-18

Mar

-19

YO

Y P

erc

en

t

Case-Shiller 20 City U.S. Home Price IndexYOY % Increase

200

300

400

500

600

700

800

3.0

3.5

4.0

4.5

5.0

5.5

6.0

Mar

-11

Sep

-11

Mar

-12

Sep

-12

Mar

-13

Sep

-13

Mar

-14

Sep

-14

Mar

-15

Sep

-15

Mar

-16

Sep

-16

Mar

-17

Sep

-17

Mar

-18

Sep

-18

Mar

-19

Ne

w-T

ho

usa

nd

s

Exis

tin

g-M

illio

ns

U.S. New and Existing Home Sales

Existing-Left

New-Right

25


Source: U.S. Treasury

9/30/19

$9

$10

$11

$12

$13

$14

$15

$16

$17

$18

$19

$20

$21

$22

$23

$24

Sep

-09

Mar

-10

Sep

-10

Mar

-11

Sep

-11

Mar

-12

Sep

-12

Mar

-13

Sep

-13

Mar

-14

Sep

-14

Mar

-15

Sep

-15

Mar

-16

Sep

-16

Mar

-17

Sep

-17

Mar

-18

Sep

-18

Mar

-19

Trill

ion

s

U.S. Federal Debt Outstanding

1.9

2.0

2.1

2.2

2.3

2.4

2.5

2.6

2.7

Sep

-09

Mar

-10

Sep

-10

Mar

-11

Sep

-11

Mar

-12

Sep

-12

Mar

-13

Sep

-13

Mar

-14

Sep

-14

Mar

-15

Sep

-15

Mar

-16

Sep

-16

Mar

-17

Sep

-17

Mar

-18

Sep

-18

Mar

-19

Pe

rce

nt

U.S. Treasury Interest Bearing Debt Avg Rate

26


Fed Funds Anticipated Rate from the September 18, 2019 FOMC Meeting

Source: Bloomberg

9/30/19

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2.20

Oct

-20

19

No

v-2

01

9

Dec

-20

19

Jan

-20

20

Feb

-20

20

Mar

-20

20

Ap

r-2

02

0

May

-20

20

Jun

-20

20

Jul-

20

20

Au

g-2

02

0

Sep

-20

20

Oct

-20

20

No

v-2

02

0

Dec

-20

20

Jan

-20

21

Feb

-20

21

Mar

-20

21

Ap

r-2

02

1

May

-20

21

Jun

-20

21

Jul-

20

21

Au

g-2

02

1

Sep

-20

21

Oct

-20

21

No

v-2

02

1

Dec

-20

21

Jan

-20

22

Feb

-20

22

Mar

-20

22

Ap

r-2

02

2

May

-20

22

Jun

-20

22

Jul-

20

22

Au

g-2

02

2

Sep

-20

22

Pe

rce

nt

Fed Funds vs. Fed's Anticipated Fed Funds Rate (Fed Dots)

Fed's Anticipated Rates

Fed Funds Futures

27


Source: Bloomberg

Figures may not total due to rounding

3M

Maturity

-0.131.621.762Y

-0.171.761.931Y

-0.281.822.106M

-0.281.822.09

2.01 1.67 -0.34

Change9/30/196/28/19

9/30/19

3Y 1.71 1.56 -0.15

30Y 2.53 2.11 -0.42

5Y 1.77 1.55 -0.22

10Y

1.3

1.5

1.7

1.9

2.1

2.3

2.5

2.7

3M 6M 1Y 2Y 3Yr 5Y 10Y 30Y

Pe

rce

nt

U.S. Treasury Yield Curve Change

9/30/19

6/28/19

-45

-40

-35

-30

-25

-20

-15

-10

-5

0

3M

6M 1Y

2Y

3Yr 5Y

10

Y

30

Y

Bas

is P

oin

ts

Basis Point Change

28


Source: Bloomberg

9/30/19

-0.25

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

2.50

2.75

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

-17

Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Mar

-19

Jun

-19

Sep

-19

Pe

rce

nt

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

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

-17

Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Mar

-19

Jun

-19

Sep

-19

Pe

rce

nt

U.S. Treasury Yields: 2Y and 5Y

5Y

2Y

29


Source: Bloomberg

9/30/19

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

Jan

-54

Jan

-56

Jan

-58

Jan

-60

Jan

-62

Jan

-64

Jan

-66

Jan

-68

Jan

-70

Jan

-72

Jan

-74

Jan

-76

Jan

-78

Jan

-80

Jan

-82

Jan

-84

Jan

-86

Jan

-88

Jan

-90

Jan

-92

Jan

-94

Jan

-96

Jan

-98

Jan

-00

Jan

-02

Jan

-04

Jan

-06

Jan

-08

Jan

-10

Jan

-12

Jan

-14

Jan

-16

Jan

-18

Jan

-20

Pe

rce

nt

U.S. Treasury Yields 2Yr and 5Yr - Fed Funds Target Rate

5Yr

2Yr

Fed Funds

30


Source: Bloomberg

9/30/19

Global Treasury Rates

2 Year Yields 5 Year Yields 10 Year Yields

-0.91%

-0.77%

-0.70%

-0.61%

-0.52%

-0.32%

-0.27%

0.36%

0.77%

1.58%

1.62%

-4.0% -2.0% 0.0% 2.0% 4.0%

Switzlnd

Germany

France

Portugal

Spain

Japan

Italy

England

Australia

Canada

USA

-0.91%

-0.78%

-0.64%

-0.36%

-0.30%

-0.29%

0.21%

0.28%

0.75%

1.40%

1.54%

-4.0% -2.0% 0.0% 2.0% 4.0%

Switzlnd

Germany

France

Japan

Spain

Portugal

Italy

England

Australia

Canada

USA

-0.79%

-0.57%

-0.28%

-0.22%

0.14%

0.16%

0.48%

0.82%

1.02%

1.36%

1.66%

-2.0% 0.0% 2.0%

Switzlnd

Germany

France

Japan

Spain

Portugal

England

Italy

Australia

Canada

USA

31


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

9/30/19

Current Spread is 5 Current Spread is 44

0

50

100

150

200

250

300

350

400

450

500

550

600

650

Au

g-0

5

Au

g-0

6

Au

g-0

7

Au

g-0

8

Au

g-0

9

Au

g-1

0

Au

g-1

1

Au

g-1

2

Au

g-1

3

Au

g-1

4

Au

g-1

5

Au

g-1

6

Au

g-1

7

Au

g-1

8

Au

g-1

9

Bas

is P

oin

ts

Spread: 1-5Yr Agency vs Treasury

0

50

100

150

200

250

300

350

400

450

500

550

600

650

Au

g-0

5

Au

g-0

6

Au

g-0

7

Au

g-0

8

Au

g-0

9

Au

g-1

0

Au

g-1

1

Au

g-1

2

Au

g-1

3

Au

g-1

4

Au

g-1

5

Au

g-1

6

Au

g-1

7

Au

g-1

8

Au

g-1

9

Bas

is P

oin

ts

Spread: 1-5Yr A-AAA Corporate vs Treasury

32


*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

9/30/19

Current Spread is 40 Current Spread is 17

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

Au

g-0

5

Au

g-0

6

Au

g-0

7

Au

g-0

8

Au

g-0

9

Au

g-1

0

Au

g-1

1

Au

g-1

2

Au

g-1

3

Au

g-1

4

Au

g-1

5

Au

g-1

6

Au

g-1

7

Au

g-1

8

Au

g-1

9

Bas

is P

oin

ts

Spread: AAA Asset Backed vs Treasury

-150

-100

-50

0

50

100

150

200

250

300

Au

g-0

5

Au

g-0

6

Au

g-0

7

Au

g-0

8

Au

g-0

9

Au

g-1

0

Au

g-1

1

Au

g-1

2

Au

g-1

3

Au

g-1

4

Au

g-1

5

Au

g-1

6

Au

g-1

7

Au

g-1

8

Au

g-1

9

Bas

is P

oin

ts

Spread: 0-3Yr Agency CMO vs Treasury

33


Source: Bloomberg

9/30/19

-5.8-5.0

-4.1

-2.0

-0.8-0.3 -0.2 -0.1

0.5 0.61.2 1.2 1.3 1.5 1.8 1.8

2.32.8

4.4 4.4

7.68.3

(8)

(6)

(4)

(2)

0

2

4

6

8

10

Per

cen

t

Selected Sector Quarterly Total Returns

34


Source: Bloomberg

9/30/19

-26.9

-16.1

-9.4 -8.2-5.4

-2.5-1.0

1.02.4 2.5

4.1 4.1 4.36.4 6.8 7.1

8.410.3

13.8

19.9

23.425.2

(30)

(20)

(10)

0

10

20

30

Per

cen

t

Selected Sector Year-Over-Year Total Returns

35


Sources: Bloomberg, FTN Main Street

9/30/19

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

2.00

6/3

0/1

9

7/3

/19

7/6

/19

7/9

/19

7/1

2/1

9

7/1

5/1

9

7/1

8/1

9

7/2

1/1

9

7/2

4/1

9

7/2

7/1

9

7/3

0/1

9

8/2

/19

8/5

/19

8/8

/19

8/1

1/1

9

8/1

4/1

9

8/1

7/1

9

8/2

0/1

9

8/2

3/1

9

8/2

6/1

9

8/2

9/1

9

9/1

/19

9/4

/19

9/7

/19

9/1

0/1

9

9/1

3/1

9

9/1

6/1

9

9/1

9/1

9

9/2

2/1

9

9/2

5/1

9

9/2

8/1

9

Per

cen

t

5 Year Treasury Note Yield

Tariff War Heats Up, as Trump Expands Tariffs on

Chinese Goods

Nonfarm Payrolls Beat Estimates

CPI Ticks Higher Than Expected

Solid ISM Non-Manufacturing and Private

Payroll Bounce

EU Purchasing Manager Data Surprises to the

Upside

ISM Manufacturing Enters Contraction

Territory

10Yr Treasury Inverts With 2Yr

Treasury

Economic Data in Europe Point to

Growth

Stronger Retail Sales Ebbs Concern of

Slowing Economy

Consumer Confidence Data Misses the Mark

36


Sources: Bloomberg, FTN Main Street

9/30/19

25,200

25,700

26,200

26,700

27,200

27,700

6/3

0/1

9

7/3

/19

7/6

/19

7/9

/19

7/1

2/1

9

7/1

5/1

9

7/1

8/1

9

7/2

1/1

9

7/2

4/1

9

7/2

7/1

9

7/3

0/1

9

8/2

/19

8/5

/19

8/8

/19

8/1

1/1

9

8/1

4/1

9

8/1

7/1

9

8/2

0/1

9

8/2

3/1

9

8/2

6/1

9

8/2

9/1

9

9/1

/19

9/4

/19

9/7

/19

9/1

0/1

9

9/1

3/1

9

9/1

6/1

9

9/1

9/1

9

9/2

2/1

9

9/2

5/1

9

9/2

8/1

9

Dow Jones Industrial Index

US Announces Delay in Tariffs

Trump and Xi Agree Not to Impose More

Tariffs

Trump Accuses China of Currency

Manipulation

Fed Chairman Powell Signals Fed

Cut

Trump Announces Additional Tariffs

Inverted Yield Curve Stokes Recession Fears

New Tariffs Take Effect

Q2 Productivity Increases More Than Expected

Dow Drops on Trade and Impeachment

Concerns

Consumer Sentiment Unexpectedly Rises

37

Disclosure

This report represents the opinions of FTN Financial Main Street Advisors, LLC and should not be considered predictive of any future market performance. Opinions are subject to change without notice. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered investment advice or a recommendation of any particular security, investment strategy, or investment product.

Although this information has been obtained from sources which we believe to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. All herein listed securities are subject to availability and change in price. Past performance is not indicative of future results, while changes in any assumptions may have a material effect on projected results. Ratings on all securities are subject to change.

FTN Financial Group, FTN Financial Capital Markets, FTN Financial Portfolio Advisors and FTN Financial Municipal Advisors are divisions of First Tennessee Bank National Association (FTB). FTN Financial Securities Corp (FTSC), FTN Financial Main Street Advisors, LLC, and FTN Financial Capital Assets Corporation are wholly owned subsidiaries of FTB. FTSC is a member of FINRA and SIPC—http://www.sipc.org/.

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38

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