Market Update – Global equity markets posted very strong returns despite continued macro uncertainty created by the ebbs and flows of U.S. tariff policy. Partially due to the confusion created by policy fluctuations, we saw our first signs of weakness in the U.S. job market. Initially, economists noticed an uptick in continuing jobless claims, indicating it was taking longer for people to find new jobs after they were laid off. Later in the quarter, August payrolls came in at 22,000 jobs added, a sharp slowdown from the prior month and the run rate of approximately 160,000 per month in the first half of the year.

As a result of the recent weakness in the labor market, the Federal Reserve cut interest rates for the first time this year by 25 basis points, leaving the Fed Funds rate at 4.0%. Forecasts released after the meeting indicated that the Fed expects to deliver two more 25 basis point cuts in 2025. This will be challenging as inflation data has
ticked up modestly in the U.S. this year as the impact of tariffs has begun to flow through to the consumer. Despite the macro challenges, consumer spending remained resilient during the quarter.

Global equities, as measured by the MSCI ACWI Index, increased 7.6% in the third quarter, leaving them up 18.4% year-to-date. U.S. stocks closed the gap with other developed markets in the quarter as the S&P 500 posted an 8.1% return, leaving it up 14.8% year-to-date in 2025. Developed non-U.S. markets, as measured by the MSCI
EAFE Index, gained 4.8%, lagging the U.S. but maintaining their lead year-to-date with a 25.1% gain. Emerging market equities led the way, up 10.6% for the quarter and an impressive 27.5% year-to-date. Growth stocks were also strong, with the Russell 1000 Growth Index posting a 10.5% return, bringing it to 17.2% year-to-date. This
compares to the Russell 1000 Value Index’s 5.3% return in the second quarter and 11.7% year-to-date gain.

Fixed income generated gradual gains in the third quarter. The Bloomberg Aggregate Bond Index rose 2.0%, bringing it to a 6.1% year-to-date return. U.S. long-term Treasuries returned rose 2.5%, leaving them up 5.6% year-to-date. High-yield bonds remained the best-performing fixed income sector, up 2.4% during the quarter and 7.1% year-to-date.

Real asset returns were solid during the quarter. The Bloomberg Commodity Index rose 3.6% and is up 9.4% year-to-date. For the quarter, precious metals’ 17.4% gain led all commodity sectors. Downward movement in interest rates helped push REITs higher, with the index up 4.8%, bringing the sector to a gain of 4.7% year-to-date.
Most REIT sectors were positive for the quarter with Healthcare REITs leading the way with a 15% gain.

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