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Hilltop Securities tells Farmers Branch council the portfolio is conservative, liquid and positioned for potential rate cuts
Summary
Hilltop Securities presented an economic outlook and city portfolio review: unemployment around 4.3%, headline CPI ~2.5%, portfolio book value about $127 million with a 4.21% yield as of 09/30/2025; staff said the strategy focuses on liquidity and managing rate risk.
Hilltop Securities Asset Management presented an economic overview and a high‑level review of the City of Farmers Branch's investment portfolio during the study session. Finance Director Jay Patel introduced the item as background for upcoming strategic‑planning discussions.
Matt Harris, a portfolio advisor with Hilltop Securities, said the labor market has cooled, citing recent data of about 181,000 net payrolls added (which he described as roughly 15,000 jobs per month) and an unemployment rate "around 4.3%." He said headline CPI was near 2.5% and core inflation about 2.4%, and that financial markets anticipated two to three Federal Reserve rate cuts over the coming year with the first cut possibly in June or July.
Harris said the city's portfolio (data "as of 09/30/2025") had a book value of roughly $127,000,000, with the portfolio remaining "highly liquid, conservative, and fully compliant with the city's investment policy and the Texas Public Funds Investment Act." He reported a portfolio yield of 4.21% at the reporting date and said the portfolio is laddered with securities maturing at regular intervals. "Because we've chosen to extend maturity selectively when yields were elevated, the portfolio is positioned to maintain those higher yields even if short term interest rates fall later this year," Harris said.
In Q&A, Councilman Veil asked what monthly job gains would be required to keep unemployment steady. Harris said a break‑even payroll number was around 50,000 per month, lower than historical figures due to demographic and productivity factors. On the effect of potential Fed cuts, Harris said local government investment pool yields are likely to decrease when the Fed lowers rates but that locking in longer maturities in portions of the portfolio should help preserve yield.
The presentation was framed as preparatory material for strategic planning; no investment policy change or vote was recorded during the study session.
