Nov 06

Oklahoma Fiscal Year 2024 Investment Report


TOTAL FUNDS INVESTED Funds available for investment at market value include the State Treasurer’s investments at $12,412,332,151 and State Agency balances in OK Invest at $3,972,739,644, for a total of $16,385,071,795.
MARKET CONDITIONS
The Federal Reserve held rates high during fiscal year 2024. The benchmark federal funds rate—the rate banks borrow at to meet their reserve requirements—started at 5% to 5.25%. At the July 2023 Federal Open Market Committee meeting the rate was raised 25 basis points to 5.25% to 5.5%, the highest rates since February 2001. Throughout the fiscal year the Fed kept interest rates elevated to fight against stubborn inflation that persisted above the annual target rate of 2%. The significant lag between the changes in monetary policy and consumer spending pointed to how insulated US consumers were from the high-rate environment. The treasury yield curve, a visual portrayal of interest rates and US treasury security maturity dates, remained inverted or negatively sloped this fiscal year. Short-term yields are slowly falling, and long-term yields are rising in a pattern called disinversion. The 2-year treasury note yield fell 14.5 basis points to 4.76% and the 10-year treasury note yield rose 55.7 basis point to 4.40% during the fiscal year. US equity indices performed exceptionally well during the fiscal year with stable interest rates as investors balanced fears of inflation and promises of future rate cuts with the motto “higher for longer”. The technology sector led the stock market rally with the firms that stand to benefit most from the AI revolution at the front of the pack. The S&P 500, Dow Jones Industrial Average and the Nasdaq 100 grew during the fiscal year by 22.7%, 13.8%, and 29.6% respectively before reinvesting dividends. The S&P 500 and Nasdaq 100 both hit all-time highs in June.

ECONOMIC DEVELOPMENTS
The national unemployment rate was historically low throughout the fiscal year ending June at 4.1%. There were approximately 2.5 million non-farm seasonally adjusted jobs created in FY 24, in comparison to 3.7 million in FY 23. The seasonally adjusted Consumer Price Index (CPI) and the Producer Price Index (PPI) grew 2.98% and 2.88% respectively for FY 24. The unadjusted price index for food increased 2.22% during the fiscal year, below headline inflation. The unadjusted price index for shelter increased 5.16% during the same period, outpacing inflation but decelerating from a red hot 7.83% in FY 23. 
Retail sales grew 1.97% during the fiscal year slightly ahead of the prior period’s growth of 1.94%. June existing home sales fell to 3.9 million units, just barely above October’s 3.85 million, the lowest since 2010. The fiscal year ended with June 30-year fixed mortgage rates at 6.92%—falling from October’s 23 year high of 7.62%—and median existing home sales price of $426,900, an all-time high.
The gross domestic product (GDP)—a measure of goods and services produced across the United States—on an annualized quarter-over-quarter basis, growth was – 4.4% for the 3rd quarter of 2023, 3.2% for the 4th quarter of 2023, 1.6% for the 1st quarter of 2024 and 3.0% for the 2nd quarter of 2024. GDP growth was primarily fueled by three industries for the fiscal year: retail motor vehicles and parts dealers, healthcare and social assistance, and non-durable goods led by petroleum, coal, and chemical products per data from the Bureau of Economic Analysis.
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.
Best regards, signature TODD RUSS
STATE 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. FY24 Annual Investment Report.pdf
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