Oklahoma State Treasurer Todd Russ issued his monthly investment performance report for July 2023 detailing portfolio performance, diversification and strategy. He reported the portfolio’s diversification strategy continues to be robust. Highlights of the report include:
- The July 2023 portfolio yielded 2.67% with a weighted average maturity of 1,000 days.
- Total assets equaled $15.7 billion, up $2.6 billion in comparison to July 2022.
- State bond issues and foreign bonds totaled 0.5% comprising the funds invested balance.
- U.S. government sponsored enterprises marked 14% of the portfolio and 18% of mortgage-backed securities.
- U.S. treasuries represented 60% of assets, 7% of money market mutual funds and 0.5% of certificates of deposit.
The benchmark 10-year treasury ended July at 3.96% in comparison to 3.84% the month before. The 2-year was 4.88% and the 30-year closed at 4.01%.
On July 26, 2023, the Federal Reserve unanimously raised interest rates by 0.25% putting the fed funds target range from 5.25% to 5.50%. The rate increase was anticipated and raised borrowing costs to their highest level in 22 years. The Fed continues to take a data-dependent approach to reach their 2% inflation goal. The Fed resumes balance sheet holdings cuts by allowing monthly maturing bond proceeds to not be reinvested, up to $95 billion.
The unemployment rate for June declined by 0.1% to 3.6%. The nonfarm payroll number came in lower than forecasted at 209,000. “It is the lowest reading since December of 2020 but remaining more than twice the 70,000-100,000 needed per month to keep up with growth in the working-age population,” according to Trading Economics. Payrolls for both May and April were downwardly revised by 33,000 and 77,000, respectively.
The Consumer Price Index increased 0.2% in June on a seasonally adjusted basis, after increasing 0.1% the previous month. On a year-over-year basis, the index rose 3% before seasonal adjustment, reflecting the lowest level since March 2021. The Producer Price Index (PPI) increased by 0.1% and May data was downwardly revised to 0.4% from 0.3%.
Retail sales in June were below expectations coming in at 0.2%. Data for May was upwardly
revised to 0.5% instead of the previously reported 0.3%. On an annualized basis retail sales gained 1.5%. Core retail sales, which excludes automobiles, gasoline, building materials and food services, increased 0.6% and the previous month was also upwardly revised by 0.1%.
The number of existing 4.16 million homes sold in the U.S dropped to the lowest level in 5 months, falling 3.3% to a seasonally adjusted annualized rate of 4.16 million in June. This
was in comparison to 4.30 million the month before. Sales of existing homes declined in the South and Western states by 5.4% and 5.1%, respectively. The Midwest sales numbers were consistent with May, and the Northeast gained 2%.
The gross domestic product (GDP) increased at an annual rate of 2.4% for the period of April-June. The first quarter GDP increased 2.0%. Consumer spending was attributed to the solid quarter results.
All funds under the control of the Oklahoma State Treasurer’s Office requiring collateralization were secured at rates ranging from 100% to 110%, depending on the type of investment.
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.
Funds available for investment, at market value, include the State Treasurer’s investments at $12.072,680,410 and State Agency balances in OK Invest at $3.634,131,637 for a total of $15,706,812,047.
