The Pension Boards - PBUCC - Market Update from CIO Lan Cai, CFA

Market Update from CIO Lan Cai, CFA – July 2025

Global markets were positive in July led by the U.S. followed by emerging markets equities. The global equity index (MSCI ACWI IMI) was positive at +1.36% in July and is up +11.54% YTD. The S&P 500, which tracks large cap U.S. stocks, increased by +2.24% in July and is up +8.59% YTD. The Russell 2000 Index, which tracks domestic small cap stocks increased by +1.73% in July and is down -0.08% YTD. The International developed equity index (MSCI EAFE) decreased by -1.40% in July and is up +17.77% YTD. The emerging markets index (MSCI EM) increased by +1.95% in July and is up +17.51% YTD.
In July, bond yields increased across maturities; the 30-year U.S. Treasury bond yield increased by 11 bps to 4.89%, the 10-year yield increased by 13 bps to 4.37%, and the 2-year yield increased by 22 bps to 3.94%.
The Barclays U.S. Aggregate Index, which is a measure of U.S. Bond prices, decreased by -0.26% in July and is up +3.75% YTD.

U.S. gross domestic product (GDP) in the second quarter of 2025 increased by 3.0%, according to the “Adv” estimate released by the Bureau of Economic Analysis. In the first quarter of 2025 GDP decreased by -0.5%.
The July Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 50.10% from 50.80% in June. This represents expansion. The July Manufacturing PMI decreased to 48.00% from 49.00% in June.
July non-farm employment increased by 73,000 jobs, and the unemployment rate dropped to 4.2%, as reported by the Bureau of Labor Statistics on August 1st, 2025. In July employment increased health care and social assistance, while the Federal government lost jobs. Average Hourly Earnings (wages) increased by 3.9% year-over-year in June.

The Equity Fund increased by +0.69% in July and is up +8.26% YTD. The Bond Fund decreased by -0.38% in July and is up +3.34% YTD. The Stable Value Fund was up +0.21% for July and is up +1.40% YTD. The Northern Trust World Selection Index Fund increased by +1.21% in July and is up +9.61% YTD.
The Balanced Fund increased by +0.58% in July and is up +6.96% YTD. The Target Annuitization Date TAD 2025; TAD 2030; TAD 2035; TAD 2040 TAD 2045 and TAD 2050 returns were +0.19%, +0.15%, +0.23%, +0.32%, +0.40% and +0.48% respectively for July and +3.25%, +5.10%, +6.11%, +6.55%, +6.92% and +7.29% YTD.