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

Market Update from CIO Dave Klassen – October 2024

Global equity markets turned negative in the month reversing the positive rally from the previous month in anticipation of the U.S. Presidential election and Federal Reserve rate decisions. The global equity index (MSCI ACWI IMI) decreased by -2.24% in October and is up +16.00% YTD. The S&P 500, which tracks large cap U.S. stocks, decreased by -0.91% in October and is up +20.97% YTD. The Russell 2000 Index, which tracks domestic small cap stocks decreased by -1.44% in October and is up +9.56% YTD. The International developed equity index (MSCI EAFE) decreased by -5.44% in October and is up +6.85% YTD. The emerging markets index (MSCI EM) decreased by -4.45% in October and is up +11.66% YTD.
In October, bond yields increased across maturities; the 30-year U.S. Treasury bond yield increased by 33 bps to 4.47%, the 10-year yield increased by 47 bps to 4.28%, and the 2-year yield increased by 50 bps to 4.16%.
The Barclays U.S. Aggregate Index, which is a measure of U.S. Bond prices, decreased by -2.48% in October and is up +1.86% YTD.

U.S. gross domestic product (GDP) in the third quarter of 2024 increased by 2.8%, according to the “Advance” estimate released by the Bureau of Economic Analysis. In the second quarter of 2024 GDP increased by 3.0%.
The October Services PMI (formerly Non-Manufacturing Purchasing Managers Index) increased to 56.00% from 54.90% in September. This represents expansion and is higher than market expectations of 53.80%. The October Manufacturing PMI declined to 46.50% from 47.20% in September. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion and below 50 is considered economic contraction.
October non-farm employment increased by 12,000 jobs, and the unemployment rate was unchanged at 4.1%, as reported by the Bureau of Labor Statistics on November 1st, 2024. In October employment increased in health care and government. Average Hourly Earnings (wages) increased by 4.0% year-over-year in October.

The Equity Fund decreased by -2.00% in October and is up 13.80% YTD. The Bond Fund decreased by -2.39% in October and is up 2.20% YTD. The Stable Value Fund was up +0.23% for October and is up 1.95% YTD. The Northern Trust Global Sustainability Index Fund (GSIF) decreased by -2.51% in October and is up 15.17% YTD.
The Balanced Fund decreased by -2.55% in October and is up 7.28% YTD. The Target Annuitization Date TAD 2025; TAD 2030; TAD 2035; TAD 2040 TAD 2045 and TAD 2050 returns were -0.87%, -1.88%, -2.17%, -2.13%, -2.10% and -2.07% respectively for October and up +4.77%, +7.40%, +8.40%, +10.11%, +10.95%, and +11.67% YTD.