Market Update from CIO Dave Klassen - 2019 April

MARKETS

  • Global financial markets continued the strength of the first quarter. The S&P 500, which tracks large cap U.S. stocks, was up 4.05% in April and is up 18.25% Y-T-D. The Russell 2000 Index, which tracks domestic small cap stocks increased 3.40% in April and is up 18.48% Y-T-D. The International developed equity index (MSCI EAFE), increased 2.81% in April and is up 13.07% Y-T-D. The emerging markets index (MSCI EM) increased 2.11% in April and is up 12.23% Y-T-D.
  • In April, bond yields increased, and prices decreased; the 30-year U.S. Treasury bond yield increased 12bps to 2.93%, while the 10-year yield increased 10bps to 2.51%, and the 5-year yield increased 5bps to 2.28%.
  • The Barclays Aggregate Index, which is a measure of U.S. Bond prices, increased 0.03% for April and is up 2.97% Y-T-D.

ECONOMIC AND GEOPOLITICAL HEADLINES

  • U.S. gross domestic product (GDP) in the first quarter of 2019 increased 3.2%, according to the “advance” estimate released by the Bureau of Economic Analysis. Fourth quarter 2018 GDP increased 2.2%.
  • The April Purchasing Managers Index (PMI) registered to 52.6, from a preliminary of 52.4. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
  • April non-farm employment increased by 263,000 jobs, and the unemployment rate declined to 3.6 percent, as reported by the Bureau of Labor Statistics on May 3rd. Notable gains came from professional and business services, construction, health care, and social assistance. Average Hourly Earnings (wages) increased 3.2% year-over-year. Payroll number for February were revised up by 23,000 and March were revised down by 7,000 versus what was previously reported. After revisions, job gains over the past three months averaged 169,000.

PERFORMANCE UPDATES

  • Net of all fees, all accumulation Funds increased for April 2019.  The Equity Fund increased 3.10% in April and is up 15.39% Y-T-D. The Bond Fund was up 0.13% in April and is up 3.56% Y-T-D. The Stable Value Fund was up 0.18% for April and is up 0.61% Y-T-D. The Northern Trust Global Sustainability Index Fund (GSIF) increased 3.49% for April and is up 15.79% Y-T-D.
  • The Balanced Fund increased 1.81% in April and is up 9.86% Y-T-D. The Target Annuitization Date (TAD) 2020; TAD 2025; TAD 2030; TAD 2035; and TAD 2040 were all up 0.32%, 1.36%, 1.88%, 2.08% and 2.29%, respectively for April and are up 2.25%, 7.58%, 9.99%, 11.05% and 11.96% Y-T-D, respectively.