Chief Financial Officer's (CFO) Report to the Board

DIF Balance Sheet - First Quarter 2019

Fund Financial Results

($ in millions)

Balance Sheet   Mar-19 Dec-18 Quarterly Change Mar-18 Year-Over-Year Change Cash and cash equivalents $7,062 $5,774 $1,288 $3,119 $3,943 Investment in U.S. Treasury securities 93,507 92,708 799 84,831 8,676 Assessments receivable 1,372 1,376 (4) 2,783 (1,411) Interest receivable on investments and other assets, net 567 550 17 581 (14) Receivables from resolutions, net 3,187 3,058 129 5,194 (2,007) Property and equipment, net 324 329 (5) 325 (1) Total Assets $106,019 $103,795 $2,224 $96,833 $9,186 Accounts payable and other liabilities 211 198 13 200 11 Liabilities due to resolutions 554 605 (51) 1,154 (600) Postretirement benefit liability 236 236 (0) 259 (23) Contingent liability for anticipated failures 115 114 1 113 2 Contingent liability for guarantee payments and litigation losses 33 33 (0) 35 (2) Total Liabilities $1,149 $1,186 ($37) $1,761 ($612) FYI: Unrealized gain (loss) on U.S. Treasury securities, net (194) (615) 421 (975) 781 FYI: Unrealized postretirement benefit (loss) gain (14) (14) 0 (46) 32 Fund Balance $104,870 $102,609 $2,261 $95,072 $9,798

 

Treasury Yields: Current and Historical
	3/31/2019 (current)	02/28/2019 (1 month ago)	03/31/2018 (1 year ago)
1M	2.43	2.41	1.62
3M	2.39	2.44	1.71
6M	2.43	2.50	1.92
1Y	2.39	2.54	2.09
2Y	2.26	2.52	2.27
3Y	2.21	2.50	2.38
4Y	2.23	2.51	2.50
5Y	2.23	2.51	2.56
6Y	2.29	2.58	2.65
7Y	2.31	2.62	2.69
8Y	2.35	2.66	2.72
9Y	2.38	2.70	2.74
10Y	2.41	2.72	2.74

 

The Treasury yield curve is now inverted reflecting concerns about economic growth both in the U.S. and internationally. The short end of the curve is anchored due to the current Fed Funds Target which is set to 2.25-2.50%. The inversion which starts in the 6-month sector became stronger in February and reflects growing concerns for a mild recession in 2020 and market speculation that there will be no Fed rate hikes and even the possibility of a cut in the next year. At the same time, inflation remains muted which is keeping yields for the longer maturity sectors down and fairly flat.