The Pension Boards - PBUCC - Market Update from CIO Dave Klassen

Market Update from CIO Dave Klassen – April 2024

Global equity market returns turned negative in April as geopolitical worries increased and the expectations for the Fed’s rate cut reduced following stickier inflation data. The global equity index (MSCI ACWI IMI) decreased by -3.30% in April and is up +4.63% YTD. The S&P 500, which tracks large-cap U.S. stocks, decreased by -4.08% in April and is up +6.04% YTD. The Russell 2000 Index, which tracks domestic small-cap stocks decreased by -7.04% in April and is down -2.22% YTD. The International developed equity index (MSCI EAFE) decreased by -2.56% in April and is up +3.08% YTD. The emerging markets index (MSCI EM) increased by +0.45% in April and is up +2.83% YTD.
In April, bond yields increased across maturities; the 30-year U.S. Treasury bond yield increased by 45 bps to +4.79%, the 10-year yield increased by 49 bps to +4.69%, and the 2-year yield increased by 45 bps to +5.04%.
The Barclays U.S. Aggregate Index, which is a measure of U.S. Bond prices, decreased by -2.53% in April and is down -3.28% YTD.

U.S. gross domestic product (GDP) in the first quarter of 2024 increased by 1.6%, according to the “Advanced” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2023 GDP increased by 3.4%.
The April Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 49.40% from 51.40% in March. This represents expansion and is lower than market expectations of 52.00%. The April Manufacturing PMI decreased to 49.20% from March’s 50.30%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion and below 50 is considered economic contraction.
April non-farm employment increased by 175,000 jobs, and the unemployment rate increased to 3.9%, as reported by the Bureau of Labor Statistics on May 3rd, 2024. In April employment increased in health care, social assistance, and in transportation and warehousing. Average Hourly Earnings (wages) increased by 3.9% year-over-year in April.

The Equity Fund decreased by -3.18% in April and is up 4.15% YTD. The Bond Fund decreased by -2.31% in April and is down -2.99% YTD. The Stable Value Fund was up +0.22% for April and is up 0.74% YTD. The Northern Trust Global Sustainability Index Fund (GSIF) decreased by -4.16% in April and is up 4.93% YTD.
The Balanced Fund decreased by -2.94% in April and is up 0.63% YTD. The Target Annuitization Date TAD 2025; TAD 2030; TAD 2035; TAD 2040 TAD 2045 and TAD 2050 returns were -1.25%, -2.45%, -2.76%, -2.93%, -3.02% and -3.04% respectively for April and up +0.76%, +0.73%, +0.94%, +1.94%, +2.34%, and +2.82% YTD..