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Yield Curve <br />4.00% <br />3.00% <br />2.00% <br />1.00% <br />0.00% <br />Treasury Bills <br />3 months agocurrent <br />The most current overnight rate was set on December 16, 2008 at 0.00% to 0.25%. Last quarter it was <br />anticipated thatthe Federal Reserve would increase the overnight rate as early as the spring,but now <br />projections are that it will not happen until after April. While the U.S. economy continues to show signs <br />of strengthand the employment situationhas been steadily improving, the Fed is projected to keep rates <br />low until possiblyMay. Fears of deflation, driven in part by fallinggas prices, and weak overseas <br />economiescontinue to be factors. The nextmeeting isscheduled for January 27-28. Any future <br />increaseswill certainly be data dependent. We will continue to focus on laddering the portfolio to <br />maintain a constant cash flow and a liquid position. <br />2 Year T-Note <br />8.00% <br />6.00% <br />4.00% <br />2.00% <br />0.00% <br />In summary, we will continue to invest the City’s funds in conservative investments, as authorized by the <br />Public Funds Investment Act, always keeping in mind Safety first, and then Liquidity and lastly Yield. <br />3 <br /> <br />