The taming of inflation was the main financial story. Bond and capital markets were cooperative, even if voters upset about property taxes were not. Governors, mayors, finance directors and pension pros may soon look back wistfully at 2024’s business-as-usual atmosphere.
Increasing climate risks are spiking demand for weather technology as businesses try to protect themselves against changing climate and social norms.
While they enjoy today’s high tide in the money markets, state and local treasurers should also promote the case for expanded and targeted federal insurance for public deposits.
Congress could enable cities to employ tax-exempt bonds to help stabilize their office tax bases in a way that’s friendly to both taxpayers and the IRS. There might already be opportunities for brave mayors and crafty public financiers.
Today’s interest rates may tempt public financiers to try to play the spread between tax-exempt and taxable bond yields. That invites heightened federal scrutiny, but there are some strategies likely to avoid the bite of the IRS.
Billions of dollars in tax-sheltered municipal bonds are sold to fund stadiums and arenas that enrich team owners while fueling federal deficits. Local politicians can’t say no, but Congress should.
As inflation and interest rates ease, 2024 will be a perfect time for overdue multiyear strategic planning and keeping up with breakthrough information technologies.
Office workers’ exodus should be countered with wiser state and federal tax incentives, and there’s a novel municipal bond angle to promote. But cities themselves must step up to stem the urban maladies that feed public fears.
Halloween seems an apt metaphor for what state and local financiers will encounter over the next year and beyond: plenty of tricks but a modest supply of treats.
With federal deficits soaring, bond issuers may face higher financing costs. State and local cash managers shine for now, but all eyes will be on the coming congressional budget battle.
Governments need to balance expected returns on their invested cash with the costs of their bonds and other obligations. Shifting a portion of their long-term debt from fixed to floating rate is a way to hedge interest rate risk.
An online resource now being built out has the potential to become an important intellectual hub for public-sector investment practitioners. They need to articulate what they most want to find there.
It is irresponsible and dangerous for politicians to dictate which investments public asset managers must favor. States, municipalities and public pensions are paying higher interest rates on bonds and getting poorer returns on investments.
A debt-ceiling breach would cost states in terms of revenue, pension investment losses and increased borrowing costs. Even a fix at this point will likely lead to cuts in federal grants.
State and local financiers now face interest rate markets that anticipate decelerating inflation and a weaker economy. Public treasurers and debt managers need fresh ideas, agility and prudent strategies.
Culture wars over environmental, social and governance factors used by pension fiduciaries are in the spotlight, but it’s the municipal bond arena where long-term analysis must trump short-term symbolic politics. Sustainability actually matters to investors.
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