The URL can be used to link to this page

Home My WebLink About2025 05 12 Awards and Presentations 100 - PFM Assest Management LLCAWARDS AND PRESENTATIONS ITEM 100 CITY COMMISSION AGENDA | MAY 12, 2025 REGULAR MEETING TITLE PFM Asset Management LLC presentation on the highlights of the most recent Quarterly Investment Report for the period ending 3/31/2025. SUMMARY Sean Gannon and Dani Metz from PFM Asset Management Group LLC will provide a brief presentation on the highlights of the most recent Quarterly Investment Report for the period ending 3/31/2025. FUNDING SOURCE RECOMMENDATION No action required at this time. 7 pfmam.comA Division of U.S. Bancorp Asset Management, Inc. For Institutional Investor or Investment Professional Use Only –This material is not for inspection by, distribution to, or quotation to the general public City of Winter Springs Investment Performance Review for the Quarter Ended March 31, 2025 May 12, 2025 Sean Gannon, CTP Institutional Sales & Relationship Manager Datnilza “Dani” Metz Institutional Sales & Relationship Manager 8 Market Update 9 •U.S. economy is clouded by tariff and policy uncertainty •Labor market continues to serve as backbone •Goods inflation weighs on progress towards Fed’s 2% inflation target •Fiscal policy uncertainty and volatile tariff rollouts weigh on consumer sentiment •Fed takes a pause from easing but looks to continue cutting later this year •The Fed kept the federal funds target rate unchanged at 4.25% -4.50% •The Fed’s March “dot plot” implies another 50 bps of cuts in 2025 •Fed Chair Powell stated the administration’s “significant policy changes” relating to trade, immigration, fiscal policy, and regulation is creating “considerable uncertainty” •Treasury yields fall on growing uncertainty •Yields on maturities between 2 years and 10 years fell 35-43 bps during the 1st quarter •The yield curve reinverted on the front end while the steepness of the curve between 2 years and 10 years was unchanged •Yield spreads widened off their historically low levels given growing economic concerns but still remain tight Current Market Themes 3Source: Details on market themes and economic indicators provided throughout the body of the presentation. Bloomberg Finance L.P., as of March 31, 2025.10 0% 5% 10% 15% 20% 25% 30% 1905 1925 1945 1965 1985 2005 2025 Effective Tariff Rate Effective Tariff Rate Estimated Tariff Rate after 4/2 Tariffs Have Broad Economic Implications Source: PFMAM calculations, Bloomberg Finance L.P., Bureau of Economic Analysis. As of April 2025. 1Federal Reserve: Tealbook A, September 2018. Economic Impact Tariff Revenues Inflation Consumer Spending Tariff Implications Fed staff research1 suggests each 10% increase in the effective tariff rate leads to a 0.8% increase in inflation Price increases and uncertainty could directly impact consumer confidence and spending habits Each $100 billion of tariffs paid by the consumer is approximately equal to a 0.4% increase in income taxes 4 Preliminary estimates show an average effective tariff rate in excess of 20%, which would be the highest rate in over a century Smoot-Hawley Tariff Act Fed staff research1 suggests each 10% increase in the effective tariff rate leads to a 1.4% decrease in GDP 11 -1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 2022 2023 2024 2025 Core CPI Contributions to Year-Over-Year Change Services Goods Core CPI Mar-25 4.2% 3% 4% 5% 6% 2022 2023 2024 2025 Unemployment Rate 5Source: FOMC Chair Jerome Powell Press Conference, March 19, 2025. Bureau of Labor Statistics, and Bloomberg Finance L.P., as of February 2025 (left). Bureau of Labor Statistics, and Bloomberg Finance L.P., as of March 2025 (right). Data is seasonally adjusted. Historical average unemployment rate calculated from March 2000 – March 2025. The Fed’s Dual Mandate Gets More Complicated Fed Chair Powell : “…ultimately, though, it's too soon to be seeing significant effects [from tariffs] in economic data…” Unemployment rate of 4.2% remains well below the 25-year average of 5.7% Core goods disinflation has reversed, and the impact of tariffs may further exacerbate this trend 3-month annualized goods inflation at 1.9% 12 0% 2% 4% 6% 8% 2001 2005 2009 2013 2017 2021 2025 Proportion of Monthly Separations Job Openings and Labor Turnover Survey Total Separations: Federal Federal Employment Remains a Focus 6Source: FOMC Chair Jerome Powell Press Conference, March 19, 2025. Bloomberg Finance L.P., Bureau of Labor Statistics as of March 2025 (left). FRED and Bureau of Labor Statistics, as of February 2025 (right). -50 0 50 100 150 200 250 300 350 2023 2024 2025 Th o u s a n d s Monthly Change In Nonfarm Payrolls Private Ex Health Care & Edu Health Care & Edu Govt Potential government funding cuts may have impacts beyond federal jobs Fed Chair Powell: “The [federal] layoffs … at the national level … they’re not significant yet. … There were… a good number of months … when a lot of the job creation was concentrated in … educational institutions, health care, state governments.” Since 2021, total nonfarm separations (quits plus layoffs) averaged 5.6 million per month. Of this amount, federal separations averaged 39,000, or less than 1%. 13 2025 Longer Term2026 0% 1% 2% 3% 4% 5% Fed Participants’ Assessments of ‘Appropriate’ Monetary Policy Mar-25 FOMC Projections Dec-24 Median Mar-25 Median Fed’s Latest “Dot Plot” Shows No Change to Median Projection 7Source: FOMC Chair Jerome Powell Press Conference, March 19, 2025. Federal Reserve; Bloomberg Finance L.P.. Individual dots represent each Fed members’ judgement of the midpoint of the appropriate target range for the federal funds rate at each year-end. As of March 2025. 2027 3.0%2 cuts 2 cuts 1 cut Fed Chair Powell: “What would you write down? It’s really hard to know how this is going to work out. And, again, we think our policy is in a good place … where we can move in the direction where we need to.” 14 Source: Bloomberg Finance L.P., as of March 31, 2025. U.S. Treasury Yields Lower Across the Curve 8 4.29% 3.88% 3.95% 4.07%4.21% 4.57% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% Yi e l d Maturity U.S. Treasury Yield Curve 1 Year Range March 31, 2025 December 31, 2024 3mo 2yr 5yr 7yr 10yr 20yr 30yr 15 Portfolio Review 16 Sector Allocation Analytics 10For informational/analytical purposes only and is not provided for compliance assurance. Includes accrued interest. *Sector Limit for Analysis is as derived from our interpretation of your most recent Investment Policy as provided. 5.1% 6.5% 19.7% 8.0% 1.0% 0.4% 13.1% 46.3% 0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%100.0% Local Government Investment Pool - $5,269,675 Money Market Fund - $6,761,674 Corporate - $20,529,445 Commercial Paper - $8,326,502 Municipal - $1,020,710 Agency CMBS - $422,617 ABS - $13,680,469 U.S. Treasury - $48,266,026 Portfolio Allocation Sector Limit for Analysis* 17 Portfolio Snapshot – March 31, 2025 111.Yield and duration calculations exclude cash and cash equivalents. Sector allocation includes market values. The portfolio’s benchmark is currently the ICE BofA 1 Year U.S Treasury Index. Prior to 6/30/11 it was the ICE BofA 1-3 Year Government Index. Source: Bloomberg Financial LP. An average of each security’s credit rating was assigned a numeric value and adjusted for its relative weighting in the portfolio. Portfolio Statistics Total Market Value Securities Sub-Total Accrued Interest Money Market Fund Portfolio Effective Duration Benchmark Effective Duration Yield to Maturity at Cost Yield to Maturity at Market $99,007,442.63 $91,505,044.68 $740,723.82 $6,761,674.13 0.87 years 0.88 years 4.68% 4.29% Sector Allocation U.S. Treasury | 52% Agency CMBS | <1% Municipal | 1% Commercial Paper | 9% Corporate | 22% ABS | 15% Credit Quality – S&P AA+ | 53% A-1 | 9% A+ | 7% A | 5% AA- | 4% A- | 3% BBB+ | 2% AAA | 11% NR | 5%0% 25% 50% 75% 100% 0-1 Yr 1-2 Yrs Duration Distribution Portfolio Benchmark 18 Portfolio Performance 12 1.The lesser of 10 years or since inception is shown. Since inception returns for periods one year or less are not shown. Performance inception date is March 31, 2011. 2.Interest earned calculated as the ending accrued interest less beginning accrued interest, plus net interest activity. 3.Returns for periods one year or less are presented on a periodic basis. Returns for periods greater than one year are presented on an annualized basis. 4.The portfolio’s benchmark is currently the ICE BofA 1 Year U.S Treasury Index. Prior to 6/30/11 it was the ICE BofA 1-3 Year Government Index. Source: Bloomberg Financial LP. 0% 1% 2% 3% 4% 5% 6% 3 months 12 months 3 years 5 years 10 years Re t u r n Portfolio Benchmark Market Value Basis Earnings 3 months 12 months 3 years 5 years 10 years Interest Earned $913,313 $3,759,990 $7,473,245 $8,414,567 $11,178,070 Change in Market Value $299,652 $1,464,184 $3,588,503 $2,007,816 $3,794,200 Total Dollar Return $1,212,965 $5,224,175 $11,061,748 $10,422,382 $14,972,270 Total Return Portfolio 1.24%5.57%3.93%2.20%1.89% Benchmark 1.05%4.98%3.42%1.88%1.73% Gross Margin 0.19%0.59%0.51%0.32%0.16% 19 Accrual Basis Earnings 13 1.The lesser of 10 years or since inception is shown. Performance inception date is March 31, 2011. 2.Interest earned calculated as the ending accrued interest less beginning accrued interest, plus net interest activity. 3.Realized gains / (losses) are shown on an amortized cost basis. Accrual Basis Earnings 3 Months 1 Year 3 Years 5 Year 10 Year¹ Interest Earned²$913,313 $3,759,990 $7,473,245 $8,414,567 $11,178,070 Realized Gains /(Losses)³$9,530 $27,577 ($290,400)($40,505)($29,049) Change in Amortized Cost $217,378 $933,644 $2,486,489 $2,558,238 $3,500,043 Total Earnings $1,140,221 $4,721,210 $9,669,334 $10,932,300 $14,649,063 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 Ap r - 1 5 Oc t - 1 5 Ap r - 1 6 Oc t - 1 6 Ap r - 1 7 Oc t - 1 7 Ap r - 1 8 Oc t - 1 8 Ap r - 1 9 Oc t - 1 9 Ap r - 2 0 Oc t - 2 0 Ap r - 2 1 Oc t - 2 1 Ap r - 2 2 Oc t - 2 2 Ap r - 2 3 Oc t - 2 3 Ap r - 2 4 Oc t - 2 4 Mi l l i o n s 20 Supplemental Market Review 14 21 5.0% 2% 3% 4% 5% 6% 2021 2022 2023 2024 2025 Me d i a n P r i c e i n c r e a s e s Expected Change in Prices During Next Year 15 Policy Changes Increase Consumer Uncertainty Source: FOMC Chair Jerome Powell Press Conference, March 19, 2025. Bloomberg Finance L.P. and Federal Register :: Executive Orders, as of March 2025 (left). University of Michigan Consumer, as of March 2025 (right). 0 20 40 60 80 Reagan, 1981 Reagan, 1985 G.H.W. Bush 1989 Clinton, 1993 Clinton, 1997 G.W. Bush, 2001 G.W. Bush, 2005 Obama, 2009 Obama, 2013 Trump, 2017 Biden, 2021 Trump, 2025 Number of Executive Orders Signed In First Month of TermJan 20 – Feb 20 40 50 60 70 80 90 100 2021 2022 2023 2024 2025 In d e x V a l u e ( 1 9 9 6 = 1 0 0 ) Consumer Sentiment Index Lowest Since Nov-22 Tariffs cause one year inflation expectations to surge Fed Chair Powell: “We understand that sentiment is quite negative at this time, and that probably has to do with … turmoil at the beginning of an administration…” 22 3.1% 2.4% 1.0% 0.8%0.5% 1.4% -2% -1% 0% 1% 2% 3% 4% Q3 '24 Q4 '24 Q1 '25 Q2 '25 Q3 '25 Q4 '25 U.S. GDP Forecasts Annualized Rate Range Actual Dec-24 Median of Forecasts (Post-4/2) Tariffs Drive Growth Expectations Lower 16Source: FOMC Chair Jerome Powell Press Conference, March 19, 2025; Bloomberg Finance L.P. and the U.S. Census Bureau as of February 2025 (left). Bureau of Economic Analysis and Bloomberg Finance L.P., as of April 2025. Survey responses after April 2, 2025 included in median and forecast range (right). Fed Chair Powell: “But we kind of know there are going to be tariffs and they tend to bring growth down.” The trade deficit reached a record high led by industrial supplies. This increase could reflect US companies pulling forward consumption in advance of potential tariffs. -$140 -$120 -$100 -$80 -$60 -$40 -$20 $0 2018 2019 2020 2021 2022 2023 2024 2025 Bi l l i o n U.S. Trade Balance 23 3.9% 3.4%3.1%3.0% 0% 1% 2% 3% 4% 5% 2025 2026 2027 Longer Run Federal Funds Rate Dec Projections Mar Projections 2.7% 2.2%2.0%2.0% 0% 1% 2% 3% 4% 2025 2026 2027 Longer Run PCE Inflation Dec Projections Mar Projections 4.4%4.3%4.3%4.2% 0% 2% 4% 6% 2025 2026 2027 Longer Run Unemployment Rate Dec Projections Mar Projections 1.7%1.8%1.8%1.8% 0% 1% 2% 3% 2025 2026 2027 Longer Run Change in Real GDP Dec Projections Mar Projections Fed’s Updated Summary of Economic Projections 17Source: FOMC Chair Jerome Powell Press Conference, March 19, 2025. Federal Reserve, latest economic projections as of March 2025. Fed Chair Powell: “… you see weaker growth but higher inflation—they kind of offset—and also, frankly, a little bit of inertia. When it comes to changing something in this highly uncertain environment, you know, I think there is a level of inertia where you just say, maybe I’ll stay where I am. 24 3.5% 4.0% 4.5% Dec-24 Jan-25 Feb-25 Mar-25 2-Year U.S. Treasury Yield December 31, 2024 – April 7, 2025 Treasury Yields Lower On Tariff Concerns 18Source: Bloomberg Finance L.P., as of April 7, 2025. Feb 1st & 3rd U.S. imposes 25% tariffs on Canada/Mexico & 10% on China. China retaliates Feb 26th U.S. threatened 25% tariff on E.U. Feb 13th U.S. threatened reciprocal tariffs Mar 12th U.S. imposes 25% tariff on steel and aluminum Jan 20th Trump announces America first trade policy Mar 26th U.S. announces 25% tariff on foreign autos Jan 15th CPI inflation jumps higher Feb 21st & 25th Consumer Confidence deteriorates meaningfully Apr 2nd U.S. imposes reciprocal tariffs 25 Sector Yield Spreads Source: ICE BofA 1-3 year Indices via Bloomberg, MarketAxess and PFMAM as of March 31, 2025. Spreads on ABS and MBS are option-adjusted spreads of 0-3 year indices based on weighted average life; spreads on agencies are relative to comparable maturity Treasuries. CMBS is Commercial Mortgage-Backed Securities and represented by the ICE BofA Agency CMBS Index. 19 0.0% 0.3% 0.5% 0.8% 1.0% 1.3% Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Corporate Notes A-AAA Yield Spreads -0.2% 0.0% 0.2% 0.4% 0.6% Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Federal Agency Yield Spreads Bullet Callable 0.0% 0.3% 0.5% 0.8% 1.0% 1.3% Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Mortgage-Backed Securities Yield Spreads Agency MBS AAA CMBS 0.0% 0.3% 0.5% 0.8% 1.0% 1.3% Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Asset-Backed Securities AAA Yield Spreads 26 Sector Yield Spreads Source: ICE BofA 1-3 year Indices via Bloomberg, MarketAxess and PFMAM as of March 31, 2025. Spreads on ABS and MBS are option-adjusted spreads of 0-3 year indices based on weighted average life; spreads on agencies are relative to comparable maturity Treasuries. CMBS is Commercial Mortgage-Backed Securities and represented by the ICE BofA Agency CMBS Index. 20 0.3% 0.5% 0.7% Dec-24 Jan-25 Feb-25 Mar-25 Corporate Notes A-AAA Yield Spreads 1-3 Yr. AAA-A Corp 1 Year Average -0.1% 0.1% 0.2% Dec-24 Jan-25 Feb-25 Mar-25 Federal Agency Yield Spreads Bullet Callable 1 Year Average 0.3% 0.5% 0.7% Dec-24 Jan-25 Feb-25 Mar-25 Mortgage-Backed Securities Yield Spreads Agency MBS AAA CMBS 1 Year Average 0.3% 0.5% 0.7% Dec-24 Jan-25 Feb-25 Mar-25 Asset-Backed Securities AAA Yield Spreads AAA ABS 1 Year Average 1 bp 45 bps 51 bps 48 bps 27 21 Fixed-Income Index Excess Returns Source: ICE BofA Indices. ABS indices are 0-3 year, based on weighted average life. Agency CMBS represented by ICE BofA CMBY Index. As of March 31, 2025. -0.25% 0.00% 0.25% 0.50% 0.75% 1Q25 1-Year Excess Returns 1-3 Year Indices Federal Agency Agency CMBS ABS Corp A-AAA 28 22Source: ICE BofA Indices. ABS indices are 0-3 year, based on weighted average life. As of March 31, 2025. Fixed-Income Index Total Returns in 1Q 2025 1.59% 1.44% 1.27% 1.66%1.61% 0.0% 0.5% 1.0% 1.5% 2.0% U. S . T r e a s u r y Ag e n c y AB S Co r p A - A A A Co r p B B B First Quarter 2025 Returns 5.43%5.33% 5.78%6.11%6.41% 0.0% 2.0% 4.0% 6.0% 8.0% U. S . T r e a s u r y Ag e n c y AB S Co r p A - A A A Co r p B B B 1-Year Return 1-3 Year Indices 29 Fixed-Income Sector Commentary – 1Q 2025 23 •The Federal Open Market Committee (FOMC) opted to maintain the target range for the federal funds rate at 4.25-4.5% during both meetings in Q1, citing sticky inflation, a stable unemployment rate, and ‘solid’ labor market conditions. •U.S. Treasury yields moved lower over the quarter as the 2-year Treasury yield fell 34 bps and 10-year Treasuries fell 37 bps. The change in yields reflected ongoing market sensitivity to domestic policy uncertainty, with a continued focus on the potential impacts of taxes, tariffs, immigration, and deregulation. As a result of the Treasury rally, total returns were strong for the period. •Federal Agency & supranational spreads remained low and rangebound throughout Q1. Federal agencies produced modestly negative excess returns while supranationals were slightly positive. Issuance remained quite light and the incremental income from the sectors is near zero. •Investment-Grade (IG) corporate bonds posted strong relative returns yet again as increased issuance levels were met with robust investor demand. Much of the spread widening seen during the second half of the quarter was offset by higher incremental income. From an excess return perspective, higher-quality and shorter-duration issuers outperformed in general in Q1. Financials and banking issuers continued to lead most other industries across the yield curve during the quarter. •Asset-Backed Securities spreads widened modestly from the impact of heavy new issuance levels and a modest deterioration of credit fundamentals. ABS spreads widened more than corporate spreads, resulting in worse performance over the quarter but better relative value going forward. •Mortgage-Backed Securities performance was mixed across structure and coupon during Q1 as heightened rate volatility persisted. In contrast, Agency-backed commercial MBS (CMBS) performed better for the quarter and saw positive excess returns across collateral and coupon structures. •Short-term credit (commercial paper and negotiable bank CDs) yields on the front end fell in response to downward pressure from a paydown in the supply of U.S. Treasury Bills. Yield spreads tightened over the quarter in response to moderated issuance and strong demand. The views expressed within this material constitute the perspective and judgment of PFM Asset Management at the time of distribution (03/31/2025) and are subject to change.Information is obtained from sources generally believed to be reliable and available to the public; however, PFM Asset Management cannot guarantee its accuracy, completeness, or suitability. 30 Fixed-Income Sector Outlook – 2Q 2025 24The views expressed within this material constitute the perspective and judgment of PFM Asset Management at the time of distribution (03/31/2025) and are subject to change.Information is obtained from sources generally believed to be reliable and available to the public; however, PFM Asset Management cannot guarantee its accuracy, completeness, or suitability. •U.S. Treasury volatility is expected to continue given both fiscal and monetary policy uncertainty. The potential impact of further policy changes on economic growth, inflation, and the labor market are unknown. We expect to see an ongoing steepening of the yield curve given the expectation for future Fed rate cuts. •Federal Agency & Supranational spreads are likely to remain at tight levels. Government-heavy accounts may find occasional value on an issue-by-issue basis, particularly in supranationals as issuance increases in early Q2. •Taxable Municipals continue to see little activity due to an ongoing lack of supply and strong demand which continues to suppress yields in both the new issue and secondary markets. We expect few opportunities in the near term. •Investment-Grade Corporate bond fundamentals remain favorable while technicals have weakened on the margins. A protracted trade war and resulting hit to growth could weaken credit fundamentals and technicals. Valuations have repriced from narrow levels to reflect this uncertainty. We will selectively evaluate opportunities with a focus on industry and credit quality with an eye towards tactically reducing allocations in the sector to make room for future opportunities. •Asset-Backed Securities fundamentals remain intact and credit metrics have normalized. Consumer credit trends will depend on the labor market and the consumer’s response to monetary policy easing, which tends to work on a lag. We expect spreads to remain choppy heading into Q2 despite the stability in underlying technicals and view this as an opportunity to add allocations at more attractive levels. •Mortgage-Backed Securities are expected to produce muted excess returns in Q2 as policy uncertainty may increase volatility. We may use any meaningful spread widening to add at more attractive levels. •Short-term credit (commercial paper and negotiable bank CDs) spreads in Q2 will likely depend on changes to debt ceiling dynamics or the Fed’s decision to slow the pace of quantitative tightening. Given the positively sloped shape of the money market yield curve, we favor a mix of floating rate in the front end with fixed rate in longer maturities. 31 Sector Our Investment Preferences COMMERCIAL PAPER / CD TREASURIES T-Bill T-Note FEDERAL AGENCIES Bullets Callables SUPRANATIONALS CORPORATES Financials Industrials SECURITIZED Asset-Backed Agency Mortgage-Backed Agency CMBS MUNICIPALS Negative Slightly Negative Neutral Slightly Positive PositiveCurrent outlook Outlook one quarter ago Fixed-Income Sector Outlook – 2Q 2025 2532 Monetary Policy (Global): •The Fed paused its easing cycle in the first quarter given sticky inflation and the solid labor market. While the FOMC’s “dot plot” continues to suggest 50 bps in rate cuts by the end of 2025, Fed Chair Powell indicated there is heightened risk and uncertainty due to the new administration’s policies. •Other major central banks (excluding the Bank of Japan) continued to cut rates. However, inflation remains a risk to this trend continuing, particularly in light of tariff uncertainty. Economic Growth (Global): •U.S. economic growth remained steady in 2024, but worsening consumer sentiment may weigh on spending going forward. •Pro-growth fiscal policies proposed on the campaign trail have yet to be realized, leaving rapidly changing tariff policy to weigh on growth prospects. •Escalating trade tensions create the potential for slowing global growth. Inflation (U.S.): •Progress towards the Fed’s 2% target remains stalled with goods inflation moving higher even before tariff policies were enacted. •Consumer expectations for inflation over the next 12 months have now reached their highest levels since early 2023 on tariff concerns. •Fed Chair Powell said the data are not yet reflecting tariffs and reiterated it will be difficult to directly measure the impact of these policies on prices. Financial Conditions (U.S.): •Financial conditions remained supportive in the first half of the quarter but tightened as ongoing tariff risks weighed on equity prices and credit spreads. While credit spreads widened modestly during the first quarter they remain below historic averages. •The evolving fiscal landscape and growing uncertainty may lead to tightening financial conditions over the next 6-12 months. Consumer Spending (U.S.): •Sentiment has meaningfully deteriorated as consumers expect higher prices and weaker labor market conditions as tariffs weigh on the pace of economic growth. •A material deterioration of labor market conditions remains the biggest risk factor to consumer spending. Other headwinds may include slower real wage growth and reduced willingness to spend as prices move higher due to tariffs. Labor Markets: •The labor market remains surprisingly resilient with both initial jobless claims and the unemployment rate at historically low levels. Monthly job gains continue to keep pace with labor force growth. •With hiring and quits rates low, any acceleration in layoffs may result in job seekers remaining unemployed for longer. •Federal job cuts and funding freezes could impact the hiring plans of sectors such as healthcare and higher education which rely on government funding. The impact of immigration policy remains unknown. Factors to Consider for 6-12 Months Statements and opinions expressed about the next 6-12 months were developed based on our independent research with information obtained from Bloomberg and FactSet. The views expressed within this material constitute the perspective and judgment of PFM Asset Management at the time of distribution (3/31/2025) and are subject to change.Information is obtained from sources generally believed to be reliable and available to the public; however, PFM Asset Management cannot guarantee its accuracy, completeness, or suitability. Stance Unfavorable to Risk Assets Stance Favorable to Risk Assets Current outlook Outlook one quarter ago Negative Slightly Negative Neutral Slightly Positive Positive 33 •Generally, PFMAM’s market prices are derived from closing bid prices as of the last business day of the month as supplied by ICE Data Services. There may be differences in the values shown for investments due to accrued but uncollected income and the use of differing valuation sources and methods. Non-negotiable FDIC-insured bank certificates of deposit are priced at par. Although PFMAM believes the prices to be reliable, the values of the securities may not represent the prices at which the securities could have been bought or sold. Explanation of the valuation methods for a registered investment company or local government investment program is contained in the appropriate fund offering documentation or information statement. •In accordance with generally accepted accounting principles, information is presented on a trade date basis; forward settling purchases are included in the monthly balances, and forward settling sales are excluded. •Performance is presented in accordance with the CFA Institute's Global Investment Performance Standards (GIPS). Unless otherwise noted, performance is shown gross of fees. Quarterly returns are presented on an unannualized basis. Returns for periods greater than one year are presented on an annualized basis. Past performance is not indicative of future returns. •ICE Bank of America Indices provided by Bloomberg Financial Markets. •Money market fund/cash balances are included in performance and duration computations. •S&P Global is the source of the credit ratings. Distribution of credit rating is exclusive of money market fund/LGIP holdings. •Callable securities in the portfolio are included in the maturity distribution analysis to their stated maturity date, although, they may be called prior to maturity. •MBS maturities are represented by expected average life. Important Disclosures 2734 DisclaimerDisclosures The views expressed within this material constitute the perspective and judgment of U.S. Bancorp Asset Management, Inc. at the time of distribution and are subject to change. Any forecast, projection, or prediction of the market, the economy, economic trends, and equity or fixed-income markets are based upon current opinion as of the date of issue and are also subject to change. Opinions and data presented are not necessarily indicative of future events or expected performance. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. No representation is made as to its accuracy or completeness. PFM Asset Management serves clients in the public sector and is a division of U.S. Bancorp Asset Management, Inc., which is the legal entity providing investment advisory services. U.S. Bancorp Asset Management, Inc. is a registered investment adviser, a direct subsidiary of U.S. Bank N.A. and an indirect subsidiary of U.S. Bancorp. U.S. Bank N.A. is not responsible for and does not guarantee the products, services, or performance of U.S. Bancorp Asset Management, Inc. NOT FDIC INSURED : NO BANK GUARANTEE : MAY LOSE VALUE 28 35