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Treasurer issues the monthly investment performance report.

July 2023
To the People of Oklahoma:
The Office of the State Treasurer is pleased to issue the monthly investment performance report. This report is an
important part of my office and commitment to disclose our economic environment and portfolio results.
Portfolio Performance, Diversification, and Strategy
July 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 portfolio’s diversification strategy continues to be robust, plus in keeping with the state’s statutory
investment objectives, strategies include
Seek safety, liquidity and return on investment, in that order
Laddered bond maturities and buy-and-hold
Market observation, maximizing income within investment parameters and rising interest rates
Market Conditions for July

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%.
The stock index returns reflect the markets continuation to predict a soft economic landing.
On July 26 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.
Economic Developments for July

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%.

S&P Dow Nasdaq
For the month 3.1% 3.3% 4.0%
Year-to-date 19.5% 7.3% 37.1%
According to Reuters, “In the 12 months through June, the PPI gained 0.1%. That was the smallest year-on- year rise since August 2020 and followed a 0.9% rise in May”.
Todd Russ

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 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.

Total Funds Invested
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.
Best regards,

As reported by Reuters, “online sales surged 1.9%, the most in six months. Further gains are likely after Amazon hosted its Prime Day promotion in July, which was the biggest on record. Receipts at furniture stores increased 1.4% and electronics and appliance store sales advanced 1.1%. Clothing stores sales rose 0.6% in June.

But receipts at building material and garden equipment supplies dealers dropped 1.2%. Consumers also cut back spending on sporting goods, hobbies, books and musical instruments”.
Trading Economics said, “the median existing-home price for all housing types in June was $410,200, the second-highest price
ever, compared to a record of nearly $414,000 in June last year”.

According to CNBC, “Gross private domestic investment increased by 5.7% after tumbling 11.9% in the first quarter. A 10.8% surge in equipment and a 9.7% increase in structures help power that gain. Government spending increased 2.6%, including a 2.5% jump in defense expenditures and 3.6% growth at the state and local levels”.

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