PORTFOLIO PERFORMANCE, DIVERSIFICATION, AND STRATEGY
May portfolio yielded 3.67%, up from 3.30% last year, with a weighted average maturity of 795 days.
Total assets under management of $17.7 billion, up $1.3 billion in comparison to May 2024.
Total portfolio contained 66.4% in U.S. Treasurys, 1.7% in U.S. government agencies,
11.4% in mortgage-backed securities, 19.4% money market mutual funds, 0.3% in certificates of deposit, and 0.8% 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 $12,378,467,251 and State Agency balances in OK Invest at $3,511,390,545, American Rescue Plan investments at $1,055,894,787, and the Oklahoma Capitol Improvement Authority Legacy Fund at $790,851,753 for a total of $17,736,604,336.
MARKET CONDITIONS
In May the 2-year and 10-year treasury note yields climbed 0.30% and 0.24% respectively to close at 3.90% and 4.40%. Yields were up across the board as investors moved back to equities in May. Volatility was still elevated as rates slid up and down. The 30-year bond closed at 4.93% and briefly traded above 5%, a level seen momentarily in 2023 and prolonged in 2008.
The news of progressing trade deals and the 90-day tariff pause were driving factors in the recovery. Investors will be watching negotiations and economic data closely in the coming months.
On June 5, 2025, Governor Adriana D. Kugler of the Federal Open Market Committee addressed the Economic Club of New York. Kugler addressed economic stability, encouragement from the labor market, and the moderated economic growth. Touching on policy changes, Kugler stated the FOMC is closely watching the pass-through effects of higher tariffs on inflation and labor effects of strict immigration policy that is made easier through new, real-time, and sentiment data. The Fed is also closely watching imports and predicts a reversal from the spike in front-loading that occurred ahead of tariffs. While core PCE was 2.5% and has not reached the target of 2%, professional forecasters have confidence in the Fed to bring inflation to the goal over the medium term and the Fed views the current stance of monetary policy as well positioned for any changes in the macroeconomic environment.
ECONOMIC DEVELOPMENTS
In May, unemployment was unchanged at 4.2%. According to the Bureau of Labor Statistics (BLS), total non-farm payroll employment increased by 139,000 jobs in May, coming in above consensus expectations of 125,000 jobs. The BLS writes, “employment continued to trend up in health care, leisure and hospitality, and social assistance. Federal government continued to lose jobs”. Employment in March and April were revised downwards by a combined 95,000 jobs.
The consumer price index (CPI) rose 0.1% in May, after a 0.2% climb in April, and 2.4% for the year. The BLS wrote, “the index for shelter rose 0.3% in May and was the primary factor in the all items monthly increase”. Annual core personal consumption expenditures (PCE), the Fed’s preferred measure of inflation was 2.5% in April. The producer price index (PPI) increased 0.1% in May and April was revised to -0.2%. “The Labor Department attributed May’s increase to a 0.1% growth in services prices, and a 0.2% rise in the cost of goods. Trade services prices rose, while the cost of transportation and warehousing services dipped,” said the Wall Street Journal.
Retail sales adjusted for seasonal variation fell 0.9% in May and were revised down to 0.1% for April. Motor vehicle sales were the biggest drag on sales growth at -3.5%, excluding motor vehicles, retail sales fell 0.3% in May. Motor vehicle sales grew at 8.9% in April and are up 2.5% for the twelve months ending in May per the Census Bureau.
In April, the National Association of Realtors reported that existing home sales fell -0.5% month-over-month to a seasonally adjusted annual rate of 4 million homes, practically unchanged from a year ago. Total housing inventory rose to 1.45 million. At the end of April, the average 30-year fixed rate mortgage was 6.81%, down -5.0% from a year ago. The median existing home sales price in April was $414,000, up 1.8% from last year.
The U.S. economy, measured by real gross domestic product (GDP), contracted at a 0.2% annualized rate in Q1, in comparison to a Q4 increase of 2.4%. In Q1 trade was a 4.9% drag on GDP growth. The Bureau of Economic Analysis writes, “the decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending. These movements were partly offset by increases in investment, consumer spending, and exports”.
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.
Best regards,
TODD RUSS
STATE TREASURER
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