Wooden Treasurer shares updates on Connecticut economy

By on August 4, 2021 0

Treasury press release:

August 4, 2021

Connecticut State Treasurer Shawn T. Wooden has provided the Governor and General Assembly with the monthly cash and bond report for June 2021 with updates as of July 31. Report highlights Connecticut’s continued strong cash position during the ongoing pandemic and summarizes bond issuances before year-end 2021 and bond issuances planned for the remainder of calendar year 2021 In addition, the treasurer shares his perspective on capital markets.

Cash position

As of July 31, Connecticut’s aggregate free cash flow was $ 11.2 billion, with a common cash pool of $ 9.7 billion.

“Our cash position remains strong,” said Treasurer Wooden. “The strength of our common cash pool is due to strong tax and tax revenues, federal dollars from Connecticut from the American Rescue Plan Act, and smart tax policies practiced over the past few years that will pay dividends over our long. However, we must stay the course: the Delta variant will have an impact on our economy, and it is even more essential that we maintain strong and resilient fiscal health.

At the last Bond Commission meeting, we allocated nearly $ 1 billion in much-needed infrastructure upgrades across the state to create and sustain jobs that will further improve our economy as we continue to extricate ourselves. of the pandemic. We invest directly in maintaining our schools to reflect our values: all our students deserve to have facilities that are conducive to learning, regardless of their postal code. We invest in improving our roads and highways, not only to maintain safety, but also to stimulate economic development and jobs in Connecticut. We’re also investing millions of dollars to speed up treatment of crumbling foundations in Connecticut, a long-standing problem in many cities.

Finally, we ended the year with a large budget surplus that will be used to pay off Connecticut’s long-term unfunded pension liabilities, one of my priorities. Our ability to make another meaningful payment for those legacy retirement commitments from our Rainy-Day Fund surplus – for the second year in a row and only the second time in our history – is a clear signal that Connecticut is on the right track. way. “said Treasurer Wooden.

The Connecticut Common Treasury contains operating cash in many funds and accounts. Cash is pooled to make the most of accumulated balances and to allow positive balances in one fund to temporarily offset negative balances in other funds. Bank balances are consolidated daily, and funds that should not be immediately needed to fund disbursements are collectively managed in various short-term investments or bank accounts that earn interest to successfully meet expected cash flows. No temporary transfers from bond product investment accounts have been made since December 2017.

Capital markets

The U.S. economy continues to grow to recover from the pandemic, while the COVID-19 Delta variant continues to spread, mostly among unvaccinated people. At the last meeting of the Federal Open Market Committee (FOMC), the Federal Reserve mentioned that “the trajectory of the economy continues to depend on the evolution of the virus”. As a result, the Federal Reserve has confirmed that the US economy is making progress in meeting its mandates and could pave the way for further improvements in its performance ratings needed to begin quantitative easing (QE) to maintain economic vitality; However, it could also open our economy to higher inflation rates. We expect further communications on the Federal Reserve’s timetable for reducing QE in late August or after the Federal Reserve meeting in September.

In the meantime, US stocks have continued to rally after reports of record growth in corporate earnings for the second quarter of calendar year 2021, with the S&P 500 stock index rising more than 3% in July. Non-US developed market equities also continued their upward trend of nearly half a 1%, while emerging market equities sold over 6% amid fears of Chinese interference in their markets. domestic capital with spillover effects on the emerging market sector. July also saw a significant rise in US Treasury prices, pushing the overall yield curve down and flattening, and 10-year Treasury yields down more than 20 basis points (0 , 20%) to 1.25%.

Market participants continue to monitor market price developments, economic developments and Federal Reserve actions over the coming weeks and months. Markets appear to accept the Federal Reserve’s position that recent increases in inflation will prove to be transient and not permanent. Nevertheless, the rise in Treasury prices seems incompatible with strong economic growth associated with a return to normal. As we move through the pandemic, market participants will continue to follow the debate over the raising of the U.S. debt ceiling and the upheaval caused by the actions of the Treasury Department required to manage national debt payments.

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This press release was produced by the office of the treasurer. The opinions expressed here are those of the author.