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

Market Update from CIO Dave Klassen – August 2024

Global equity markets continued the positive rally from the previous month and the International developed markets continued to lead the way. The global equity index (MSCI ACWI IMI) increased by +2.54% in August and is up +15.97% YTD. The S&P 500, which tracks large cap U.S. stocks, increased by +2.43% in August and is up +19.53% YTD. The Russell 2000 Index, which tracks domestic small cap stocks decreased by -1.49% in August and is up +10.39% YTD. The International developed equity index (MSCI EAFE) increased by +3.25% in August and is up +11.96% YTD. The emerging markets index (MSCI EM) increased by +1.61% in August and is up +9.55% YTD.
In August, bond yields decreased across maturities; the 30-year U.S. Treasury bond yield decreased by 15 bps to 4.20%, the 10-year yield decreased by 18 bps to 3.91%, and the 2-year yield decreased by 38 bps to 3.91%.
The Barclays U.S. Aggregate Index, which is a measure of U.S. Bond prices, increased by 1.44% in August and is up +3.07% YTD.

U.S. gross domestic product (GDP) in the second quarter of 2024 increased by 3.0%, according to the “Second” estimate released by the Bureau of Economic Analysis. In the first quarter of 2024 GDP increased by 1.4%.
The August Services PMI (formerly Non-Manufacturing Purchasing Managers Index) increased to 51.50% from 51.40% in July. This represents expansion and is higher than market expectations of 51.10%. The August Manufacturing PMI increased to 47.20% from July’s 46.80%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion and below 50 is considered economic contraction.
August non-farm employment increased by 142,000 jobs, and the unemployment rate decreased to 4.2%, as reported by the Bureau of Labor Statistics on September 6th, 2024. In August employment increased in health care and construction. Average Hourly Earnings (wages) increased by 3.8% year-over-year in August.

The Equity Fund increased by 2.08% in August and is up 14.19% YTD. The Bond Fund increased by 1.62% in August and is up 3.10% YTD. The Stable Value Fund was up +0.20% for August and is up 1.51% YTD. The Northern Trust Global Sustainability Index Fund (GSIF) increased by 2.40% in August and is up 16.05% YTD.
The Balanced Fund increased by 1.84% in August and is up 8.05% YTD. The Target Annuitization Date TAD 2025; TAD 2030; TAD 2035; TAD 2040 TAD 2045 and TAD 2050 returns were 0.91%, 1.64%, 1.84%, 1.94%, 1.99% and 2.0% respectively for August and up +4.81%, +7.92%, +9.03%, +10.69%, +11.49%, and +12.16% YTD.