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

Market Update from CIO Dave Klassen – November 2023

Global equity markets posted strong returns in November as companies reported better-than-expected earnings in Q3 and the US economy remained resilient with strong GDP growth. The global equity index (MSCI ACWI IMI) increased by +9.23% in November and is up +16.60% YTD. The S&P 500, which tracks large cap U.S. stocks, increased by +9.13% in November and is up +20.80% YTD. The Russell 2000 Index, which tracks domestic small cap stocks increased by +9.05% in November and is up +4.20% YTD. The International developed equity index (MSCI EAFE) increased by +9.28% in November and is up +12.27% YTD. The emerging markets index (MSCI EM) increased by +8.00% in November and is up +5.70% YTD.
In November, long term bond yields decreased more than short term yields while exhibiting intra-month volatility; the 30-year U.S. Treasury bond yield decreased by -50 bps to +4.54%, the 10-year yield decreased by -51 bps to +4.37%, and the 2-year yield decreased by -34 bps to +4.73%.
The Barclays U.S. Aggregate Index, which is a measure of U.S. Bond prices, increased by +4.53% in November and is up +1.64% YTD.

U.S. gross domestic product (GDP) in the third quarter of 2023 increased by 5.2%, according to the “Second” estimate released by the Bureau of Economic Analysis. In the second quarter of 2023 GDP increased by 2.1%.
The November Services PMI (formerly Non-Manufacturing Purchasing Managers Index) increased to 52.70% from 51.80% in October. This represents expansion and higher than market expectations of 52.00%. The November Manufacturing PMI remained unchanged at 46.70%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion and below 50 is considered economic contraction.
November non-farm employment increased by 199,000 jobs, and the unemployment rate decreased to 3.7%, as reported by the Bureau of Labor Statistics on December 8th, 2023. In November employment increased in health care and government. Average Hourly Earnings (wages) increased by 4.0% year-over-year in November.

The Equity Fund increased by +7.94% in November and is up +12.04% YTD. The Bond Fund increased by +3.99% in November and is up +2.10% YTD. The Stable Value Fund was up +0.20% for November and is up +2.03% YTD. The Northern Trust Global Sustainability Index Fund (GSIF) increased by +9.40% for November and is up +18.49% YTD.
The Balanced Fund increased by +6.82% in November and is up +7.33% YTD. The Target Annuitization Date TAD 2025; TAD 2030; TAD 2035; TAD 2040 TAD 2045 and TAD 2050 returns were +3.04%, +5.37%, +6.08%, +6.69%, +7.14% and +7.31% respectively for November and up +5.04%, +6.76%, +7.79%, +8.72%, +9.09%, and +10.21% YTD.