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

Market Update from CIO Lan Cai, CFA – May 2025

May experienced a strong recovery in the U.S. after tariff tensions eased and Big Tech earnings were solid. The global equity index (MSCI ACWI IMI) was positive at +5.75% in May and is up +5.32% YTD. The S&P 500, which tracks large cap U.S. stocks, increased by +6.29% in May and is up +1.06% YTD. The Russell 2000 Index, which tracks domestic small cap stocks increased by +5.34% in May and is down -6.85% YTD. The International developed equity index (MSCI EAFE) increased by +4.58% in May and is up +16.87% YTD. The emerging markets index (MSCI EM) increased by +4.27% in May and is up +8.73% YTD.
In May, bond yields varied across maturities; the 30-year U.S. Treasury bond yield increased by 26 bps to 4.92%, the 10-year yield increased by 24 bps to 4.41%, and the 2-year yield decreased by 29 bps to 3.89%.
The Barclays U.S. Aggregate Index, which is a measure of U.S. Bond prices, decreased by -0.72% in May and is up +2.45% YTD.

U.S. gross domestic product (GDP) in the first quarter of 2025 decreased by -0.2%, according to the “2nd” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2024 GDP increased by 2.4%.
The May Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 49.90% from 51.40% in April. This represents contraction and is below market expectations of 52.00%. The May Manufacturing PMI decreased to 48.50% from 48.70% in April.
May non-farm employment increased by 139,000 jobs, and the unemployment rate was unchanged at 4.2%, as reported by the Bureau of Labor Statistics on June 6th, 2025. In May employment increased in health care, leisure and hospitality, and social assistance. Average Hourly Earnings (wages) increased by 3.9% year-over-year in May.

The Equity Fund increased by +4.81% in May and is up +3.42% YTD. The Bond Fund decreased by -0.69% in May and is up +2.11% YTD. The Stable Value Fund was up +0.17% for May and is up +0.95% YTD. The Northern Trust Global Sustainability Index Fund (GSIF) increased by +7.04% in May and is up +4.14% YTD.
The Balanced Fund increased by +3.34% in May and is up +3.26% YTD. The Target Annuitization Date TAD 2025; TAD 2030; TAD 2035; TAD 2040 TAD 2045 and TAD 2050 returns were +0.89%, +1.56%, +2.25%, +2.75%, +3.18% and +3.60% respectively for May and +1.79%, +2.55%, +2.90%, +3.01%, +3.11% and +3.20% YTD.