| PORTFOLIO PERFORMANCE, DIVERSIFICATION, AND STRATEGYJune portfolio yielded 3.70%, up from 3.35% last year, with a weighted average maturity of 796 days.Total assets under management of $18.1 billion, up $1.8 billion in comparison to June 2024.Total portfolio contained 66.7% in U.S. Treasurys, 1.4% in U.S. government agencies,19.5% in money market mutual funds, 11.2% in mortgage-backed securities, 0.3% in certificates of deposit,and 0.9% in state and foreign bonds, comprising the balance of funds invested. |
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TOTAL FUNDS INVESTED
Funds available for investment at market value include the State Treasurer’s investments at $12,721,526,908 and State Agency balances in OK Invest at $3,547,933,304, American Rescue Plan investments at $1,007,591,618, and the Oklahoma Capitol Improvement Authority Legacy Fund at $788,246,125 for a total of $18,065,297,955.
MARKET CONDITIONS
In June the 2-year and 10-year treasury note yields fell 0.18% and 0.17% respectfully to close at 3.72% and 4.23%. The spread between the two maturities will likely continue to grow, based on the long-term pattern and the favorable pricing of the notes given the 50 basis points of rate cuts expected in 2025.
In June, the S&P 500, Dow Jones, and Nasdaq gained by 5.0%, 4.3%, and 6.6%, respectively. The S&P 500 and the Nasdaq ended the month at all-time highs. Domestic equities continued their rally from May and are up more than 25% from their April lows. Retail investors seem to be unfazed by recent tariff policy announcements and are no longer pricing in the headlines unsure of when they will go into effect.
On June 18, 2025, Jerome Powell, Chairman of the Federal Open Market Committee, reaffirmed the Federal Reserve’s commitment to its dual mandate of maximum employment and stable prices. The Fed held interest rates steady, citing a solid labor market and moderating inflation. GDP growth slowed in Q1 due to trade-related fluctuations, but private domestic demand remained strong. Inflation has declined from its 2022 highs, though it still exceeds the Fed’s 2% target. The median forecast sees inflation falling in the coming years and interest rates gradually declining. The Fed emphasized flexibility in response to economic developments and continued its review of monetary policy strategy. Powell underscored the Fed’s responsibility to anchor inflation expectations and acknowledged that trade and policy uncertainties remain elevated. The Fed remains cautious but confident in its current stance amid a complex economic environment.
| ECONOMIC DEVELOPMENTS |
| In June, unemployment fell to 4.1%. According to the Bureau of Labor Statistics (BLS), total non-farm payroll employment increased by 147,000 jobs in June, coming in above consensus expectations of 106,000 jobs. The BLS writes, “Job gains occurred in state government and health care. Federal government continued to lose jobs.” May and April employment were revised upwards a combined 16,000 jobs. |
| The consumer price index (CPI) rose 0.3% in June, after a 0.1% uptick in May, and 2.7% for the year. The BLS wrote, “The index for shelter rose 0.2 percent in June 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 2.7% in May, in line with expectations. The producer price index (PPI) was unchanged in June and May was revised up to 0.3%. Prices for communication and related goods increased 0.8% and prices for traveler accommodation services declined 4.1%. |
| Retail sales adjusted for seasonal variation rose 0.6% in June and 3.5% over the last twelve months. According to the Census Bureau, “Non-store retailers were up 4.5% from last year, while food service and drinking places were up 6.6%.” The 0.6% gain came as a surprise beat over the expectation of a 0.2% increase. |
| In May, the National Association of Realtors reported that existing home sales rose 0.8% month-over-month to a seasonally adjusted annual rate of 4.03 million homes, a 0.7% decrease from a year ago. Total housing inventory rose to 1.54 million. At the end of May, the average 30-year fixed rate mortgage was 6.89%, down 2.0% from a year ago. The median existing home sales price in May was $422,800, up 1.3% from last year. |
| The U.S. economy, measured by real gross domestic product (GDP), in the third estimate contracted at a 0.5% annualized rate in Q1, in comparison to a Q4 increase of 2.4%. In Q1 net trade was a 4.6% 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”. |
COLLATERALIZATIONAll 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 RUSSSTATE TREASURER |
