| The Office of the State Treasurer is pleased to issue the monthly investment performance report. This report is an important part of my office and commitment to disclose our economic environment and portfolio results. Portfolio Performance, Diversification, and Strategy September portfolio yielded 2.88% with a weighted average maturity of 1,000 days. Total portfolio market value of $15.5 billion, up $1.9 billion in comparison to October 2022. Total portfolio contained 63% in U.S. Treasurys, 12% in U.S. government agencies, 17% in mortgage-backed securities, 7% money market mutual funds and 1% in state bond issues and foreign bonds, comprised the balance of funds invested. |
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| Market Conditions The Treasury curve steepened and continued to reflect 15-year highs as investors remained focused on inflation and other key economic indicators. Bloomberg data indicated that yields for Treasury bonds increased across the yield curve for October compared to the previous month. Treasury yields at 2, 10 and 30-year maturities were higher by 0.04%, 0.36% and 0.39%, respectively. S&P Dow Nasdaq For the month -2.2% -1.4% -2.8% Year-to-date 9.2% -0.28% 22.8% All three major stock indices ended October in negative territory. The Wall Street Journal reported the “three-month slide in stocks has coincided with a three-month pause in interest-rate increases, the longest since the Federal Reserve began boosting borrowing costs in March 2022 to slow inflation.” The minutes from the Federal Reserve’s recent October policy meeting were released. The minutes reflect differing opinions between officials regarding future interest rate increases and stated, “A majority of participants judged that one more increase in the target funds rate at a future meeting would likely be appropriate, while some judged it likely that no further increases would be warranted.” According to CNBC, “The minutes said consumers have continued to spend, though officials worried about the impact from tighter credit conditions, less fiscal stimulus and the resumption of student loan payments.” |
| Economic Developments The Labor Department released a strong jobs report for September as non-farm payrolls rose 336,000. The job creation number beat market expectations and was the highest since January. In addition, the previous two months’ non-farm payroll numbers were upwardly revised with August increasing by 40,000 to 227,00 and July coming in at 236,000 from the previously reported 157,000. Meanwhile, the unemployment rate for October was at 3.8% and did not change from the previous month. |
| According to CNBC, “Wage increases, however, were softer than expected, with average hourly earnings up 0.2% for the month and 4.2% from a year ago, compared to respective estimates for 0.3% and 4.3%.” |
The Consumer Price Index (CPI) came in higher than anticipated at 0.4% for the month and 3.7% year-over-year. This was in comparison to core CPI at 0.3% and 4.1% from a year ago, which met expectations. Shelter costs were the primary reason for the rise in inflation, representing more than half of the rise in CPI. |
| According to Trading Economics, “Producer prices in the U.S. rose 0.5% month-over-month in September 2023, the least in three months, following a 0.7% rise in August, but above market forecasts of 0.3%.” |
Retail sales continued to beat expectations advancing 0.7% in September with the previous month being upwardly revised to 0.8% from 0.6%. On a year-over-year basis, retail sales gained 3.8%. Miscellaneous store retailers produced the largest sales gain of 3%. Motor vehicle parts and dealers, along with online sales both rose 1%. Food services added to the broad-based gains by increasing 0.9%. |
| Trading Economics reported, “Data continues to point to robust consumer spending despite high prices and borrowing costs.” |
Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell to 3.96 million in September from 4.04 million the previous month. The factors contributing to declining home sales continue to be limited inventory and reduced affordability. Foreclosures and short sales came in at 1%, unchanged from August. |
| The National Association of Realtors reported, “First-time buyers were responsible for 27% of sales in September, down from 29% in August 2023 and September 2022.” |
The third quarter numbers for gross domestic product (GDP) came in strong at a 4.9% seasonally adjusted annual rate. This was in comparison to 2.1% in the last quarter and was the highest since 2021. |
| The New York Times reported, the “acceleration was made possible in part by slowing inflation, which lifted purchasing power even as wage growth weakened, and a job market that has shown renewed vigor over the past three months,” but “pitfalls loom in the fourth quarter, including the depletion of savings, the resumption of mandatory student loan payments and the need to refinance maturing corporate debt at higher rates” |
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. |
| Payments, Fees, and Commissions Securities were purchased or sold utilizing competitive bidding. Bank fees and money market mutual fund operating expenses are detailed in the attached pages, as is the earnings split between the State Treasurer and the master custodian bank on securities lending income. |
| Total Funds Invested Funds available for investment at market value include the State Treasurer’s investments at $12,008,079,180 and State Agency balances in OK Invest at $3,506,733,237 for a total of $15,514,812,417. |
Best regards,  TODD RUSSSTATE TREASURER cc: The Honorable Kevin Stitt, Governor The Honorable Charles McCall, Speaker of the House The Honorable Greg Treat, President Pro Tempore The Honorable Gentner Drummond, Attorney General The Honorable Cindy Byrd, State Auditor and Inspector View full report below. Oct_2023_Invest_Rpt.pdf |
Dec 13
October 2023 Investment Report
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