PORTFOLIO PERFORMANCE, DIVERSIFICATION, AND STRATEGY
February portfolio yielded 3.59%, up from 3.13% last year, with a weighted average maturity of 835 days.
Total assets under management of $17.5 billion, up $1.6 billion in comparison to February 2024.
Total portfolio contained 66.1% in U.S. Treasurys, 2.7% in U.S. government agencies,
11.8% in mortgage-backed securities, 18.5% money market mutual funds, 0.2% in certificates of deposit, and 0.8% in state bond issues 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 $12,360,936,817 and State Agency balances in OK Invest at $3,182,797,299, American Rescue Plan investments at $1,116,156,430, and the Oklahoma Capitol Improvement Authority Legacy Fund at $800,720,470 for a total of $17,460,611,016.
MARKET CONDITIONS
In January the 2-year and 10-year treasury notes fell 0.21% and 0.33% respectively to 3.99% and 4.21%. Long term treasury yields declined from their January peak amid rising market uncertainty as investors seek to interpret how policy changes move markets.
In February the S&P 500, Dow Jones, and Nasdaq fell 1.4%, 1.6%, and 4.0% respectively beginning a needed correction in the leading indexes. Leading market strategists believe that this near-term uncertainty and volatility will be succeed by stronger growth in the future.
On March 7 Fed Chair Jerome Powell spoke at the University of Chicago Booth School of Business U.S. Monetary Policy Forum in New York. He addressed the uncertainty of consumer sentiment driven by inflation fears supported by tariffs that may affect future spending adding, “sentiment readings have not been a good predictor of consumption growth in recent years”. The Federal Reserve is focused on the dual mandate. Unemployment remains low and inflation has come down from its 7% peak. Powell reassured the audience that the Fed will be making decisions with clarity and restraint, well positioned to react to changes in information accordingly.
ECONOMIC DEVELOPMENTS
In February, unemployment rose to 4.1% from 4.0% in January. According to the Bureau of Labor Statistics, total non-farm payroll employment increased by 151,000 jobs in February, coming in below consensus expectations of 160,000 jobs. Employment trended up in health care, financial activities, transportation and warehousing, and social assistance. Federal government employment declined.
The consumer price index (CPI) rose 0.2% in February and 2.8% for the year. The Bureau of Labor Statistics writes, “the index for shelter rose 0.3% in January account for nearly half of the monthly all items increase”. Annual core personal consumption expenditures (PCE), the Fed’s preferred measure of inflation was 2.6% in January. The producer price index (PPI) was unchanged in February. Within the unchanged figure, there were several mixed results. The price index for chicken eggs jumped 53.6% and the price of gasoline declined 4.7%.
In January, the National Association of Realtors reported that existing home sales fell 4.9% over last month to a seasonally adjusted annual rate of 4.08 million homes, up 2.0% year over year. Total housing inventory rose to 1.18 million. At the end of January, the average 30-year fixed rate mortgage was 6.95%, up 3.9% from a year ago. The median existing home sales price in January was $396,900, up 4.8% from last year.
The U.S. economy, measured by real GDP, expanded at a 2.3% annualized rate in Q4, in comparison a Q3 increase of 3.1%. Growth was held back by downturns in investment and exports that were partly offset by solid consumer spending. Imports were down while the trade deficit reached a record high, highlighting the timeliness of the protective tariff policy that the administration maintains is a long-term solution to inflation. The Bureau of Economic Analysis writes, “the increase in real GDP in the fourth quarter primarily reflected increases in consumer spending and government spending that were partly offset by a decrease in investment. Imports, which are a subtraction in the calculation of GDP, decreased”.
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
