PORTFOLIO PERFORMANCE, DIVERSIFICATION, AND STRATEGY
February portfolio yielded 3.68%, up from 3.59% last year, with a weighted average maturity of 752 days.
Total assets under management of $17.3 billion, down $200 million in comparison to February 2025.
Total portfolio contained 68.1% in U.S. Treasurys, 0.4% in U.S. government agencies,
18.4% in money market mutual funds, 11.8% in mortgage-backed securities, 0.4% in certificates of deposit,
and 0.7% in state and foreign bonds, comprising the balance of funds invested.
TOTAL FUNDS INVESTED
Funds available for investment at market value include the State Treasurer’s investments at $11,684,417,024. State Agency balances in OK Invest at $3,698,206,564, American Rescue Plan investments at $698,278,673, and the Oklahoma Capitol Improvement Authority Legacy Fund at $1,085,921,349, Oklahoma Capital Assets Maintenance and Protection Fund at $124,096,538 for a total of $17,290,920,148.
MARKET CONDITIONS
Treasury yields declined across most maturities in February as markets processed a weaker than expected jobs report, softer inflation data, and renewed uncertainty surrounding Federal Reserve policy. The 2-year Treasury yield ended the month at 3.38%, down 14.6 basis points from January month-end, while the 10-year Treasury yield fell 29.6 basis points to close at 3.94%. The yield curve continued to steepen modestly, with the 3-month yield essentially unchanged at 3.66% and the front end comparatively stable. The overall shift in yields reflected growing market concern about slowing economic momentum rather than renewed inflation pressure.
Equity markets delivered mixed results in the month of February. The Dow Jones Industrial Average gained 0.17% for the month whilst, the S&P 500 and the Nasdaq declined 0.87% and 3.38% respectively. The Technology sector weighed heavily on the results as Investors were selling AI-related technology stocks amid concerns that spending was outpacing returns. Year to date, the Dow is up 1.90%, the S&P500 is up 0.49% and the Nasdaq Composite is down 2.47%.
In the month of February, The Federal Open Market Committee (FOMC) released their January 27-28 meeting minutes, the FOMC voted 10-2 to hold the rates steady at 3.50% – 3.75%, with Governors Christopher Waller and Stephen Miran dissenting in favor of a quarter-point reduction. Several participants signaled renewed concern about inflation, indicating that upward adjustments to the target range could be appropriate if inflation remains above the Committee’s 2% objective. The minutes noted that most participants judged labor market conditions showed signs of stabilization, while productivity gains were expected to exert downward pressure on inflation over time.
ECONOMIC DEVELOPMENTS
Labor market conditions deteriorated sharply in February. According to the Bureau of Labor Statistics, non-farm payrolls declined by 92,000, the largest monthly drop since the pandemic, and well below the median economist estimate of a gain of 55,000. January payrolls were simultaneously revised downward, reducing the combined December-January change by 69,000 positions. The unemployment rate climbed to 4.4%, above the 4.3% consensus forecast. Health care employment fell by 28,000, while federal government employment declined by 10,000, continuing a trend lower since its peak in October 2024. Average hourly earnings rose 0.4% month over month and 3.8% year over year, modestly above expectations. The labor force participation rate fell to 62.8%, the lowest since 2021, partly reflecting updated population estimates that incorporated the effects of reduced immigration.
The Consumer Price Index remained unchanged at 2.4% year over year in February. According to the Bureau of Labor Statistics, the Core CPI, which excludes food and energy, rose 0.2% from January and was unchanged at 2.5% year over year, the slowest underlying inflation pace in nearly five years. Shelter costs rose 0.2% in the month and remained the largest single contributor to the monthly headline increase, while food prices advanced 0.4%. Declines in used cars and trucks (0.4%) and motor vehicle insurance helped offset broader price pressures. Energy costs rose 0.6% on a monthly basis, driven by gasoline and utility piped gas service. Despite inflation remaining modestly above the Federal Reserve’s 2% target, the overall trend is one of continued, gradual disinflation.
The Producer Price Index for final demand increased 0.5% month over month in January, bringing the year-over-year increase to 2.9%, a slight deceleration from the 3.0% pace recorded in December. Final demand services rose 0.8% in January, the largest monthly advance since July 2025, while goods prices declined 0.3%, driven primarily by a 5.5% drop in gasoline. According to the U.S. Department of Labor, the January increase in producer prices was concentrated in services, with margins for professional and commercial equipment wholesaling, accounting for more than 20% of the gain.
Retail sales declined 0.2% in January 2026 to a seasonally adjusted $733.5 billion. According to the U.S. Census Bureau, weakness at motor vehicle and parts dealers, which fell 0.9%, was the primary drag on the headline figure, though several other categories posted gains. Non-store retailers continued to show resilience, with year-over-year total sales for the November 2025 through January 2026 period running 2.9% above the prior-year period.
The housing sector strengthened in February. Existing home sales increased 1.7% month over month to a seasonally adjusted annual rate of 4.09 million units in February. Unsold inventory rose 2.4% to 1.29 million units, representing 3.8 months of supply, unchanged to that of the month of January 2026. On a year-over-year basis, existing home sales declined 1.4%, while the median existing home sales price rose 0.3% to $398,000. NAR Deputy Chief Economist Dr. Jessica Lautz noted that housing affordability has been improving due to reduced mortgage interest rates, stating this marks eight consecutive months of improvement in housing affordability.
Real GDP increased at an annualized rate of 1.4% in the fourth quarter of 2025, decelerating from the 4.4% pace recorded in Q3. Consumer spending and investment were the primary contributors to growth, while government spending and exports declined, and imports fell modestly. Although fourth-quarter data showed signs of deceleration, growth remained positive and the data shows a continued resilience in overall economic activity.
COLLATERALIZATION
All funds under the control of this office requiring collateralization were secured at rates ranging from 100% to 110%, depending on the type of investment.
