Market Update from CIO Dave Klassen - November 2019

MARKETS

  • Global financial markets were mostly positive in November led by the U.S.  The S&P 500, which tracks large cap U.S. stocks, was up 3.63% in November and is up 27.63% Y-T-D. The Russell 2000 Index, which tracks domestic small cap stocks increased 4.12% in November and is up 22.01% Y-T-D.  The International developed equity index (MSCI EAFE), increased 1.13% in November and is up 18.17% Y-T-D. The emerging markets index (MSCI EM) decreased -0.14% in November and is up 10.20% Y-T-D.
  • In November, longer-term bond yields increased, and prices decreased; the 30-year U.S. Treasury bond yield increased by 4 bps to 2.21%, the 10-year yield increased by 9 bps to 1.78%, and the 5-year yield increased by 11 bps to 1.62%.
  • The Barclays Aggregate Index, which is a measure of U.S. Bond prices, decreased -0.05% for November and is up 8.79% Y-T-D.

ECONOMIC AND GEOPOLITICAL HEADLINES

  • U.S. gross domestic product (GDP) in the third quarter of 2019 increased 2.1%, according to the “second” estimate released by the Bureau of Economic Analysis. Second quarter 2019 GDP increased 2.0%.
  • The November Non-Manufacturing Purchasing Managers Index (PMI) fell to 53.9% from 54.7% in October due to concerns around trade and worker shortages. This was below expectations of 54.5%.  The November Manufacturing PMI decreased to 48.1% from October’s 48.3%.  Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.  
  • November non-farm employment increased by 266,000 jobs, and the unemployment rate was at 3.5%, as reported by the Bureau of Labor Statistics on December 6, 2019. Employment trended positively in health care, restaurants, and transportation jobs.  Average Hourly Earnings (wages) increased 3.1% year-over-year.

PERFORMANCE UPDATES

  • Net of all fees, accumulation funds had positive results in November, except the Bond Fund.  The Equity Fund increased 2.45% in November and is up 21.48% Y-T-D. The Bond Fund decreased by -0.19% in November and is up 8.77% Y-T-D. The Stable Value Fund was up 0.13% for November and is up 1.80% Y-T-D. The Northern Trust Global Sustainability Index Fund (GSIF) increased 2.66% for November and is up 24.05% Y-T-D.
  • The Balanced Fund increased 1.29% in November and is up 15.37% Y-T-D. The Target Annuitization Date (TAD) 2020; TAD 2025; TAD 2030; TAD 2035; and TAD 2040 were +0.14%, +0.88%, +1.34%, +1.52% and +1.70% respectively for November and are up 4.51%, 12.23%, 15.38%, 16.79% and 17.77% Y-T-D, respectively.