- Markets across the globe continued to retract in September as inflation remained a key issue across major economies and global growth expectations came down. The developed and emerging market equity index (MSCI ACWI IMI) decreased by -9.57% in September and was down -25.63% The S&P 500, which tracks large cap U.S. stocks, decreased ‑9.21% in September and was down -23.87% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, decreased –9.58% in September and was down ‑25.10% YTD. The international developed equity index (MSCI EAFE) decreased by -9.35% in September and was down -27.09% YTD. The emerging markets index (MSCI EM) decreased by –11.72% in September and was down -27.16% YTD.
- In September, longer-term bond yields increased: the 30-year U.S. Treasury bond yield increased by +52 bps to 3.79%, the 10-year yield increased by +68 bps to 3.83%, and the 5-year yield increased by +76 bps to 4.06%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased by ‑4.32% in September and was down -14.61% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the second quarter of 2022 decreased by -0.6%, according to the “third” estimate released by the Bureau of Economic Analysis. In the first quarter of 2022 GDP decreased by -1.6%.
- The September Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 56.70% from 56.90% in August. This represents expansion at a lower rate but was higher than market expectations of 56.00%. The September’s Manufacturing PMI decreased to 50.90% from August’s 52.80%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- September’s non-farm employment increased by 263,000 jobs, and the unemployment rate decreased to 3.5%, as reported by the Bureau of Labor Statistics on October 7, 2022. In September, employment increased in leisure and hospitality as well as in health care. Average Hourly Earnings (wages) increased +5.0% year-over-year in September.
- In September, the Total Equity Fund decreased -9.86% and was down -27.74% YTD. The International Equity Fund decreased -10.84% in September and was down -32.13% YTD. The Small Cap Equity Fund decreased -8.92% in September and was down -25.74% YTD. The Fixed Income Fund decreased -4.21% in September and was down -14.38% YTD.
- Most equity managers outperformed their respective benchmarks during the month. The equity managers that underperformed in the month of September were PGIM (formerly QMA) U.S. Large Cap and Baillie Gifford International.
- The UCF Balanced Fund (formerly Moderate Balanced Fund), UCF’s most popular fund, outperformed its benchmark, decreasing by -7.37% in September and -21.89% YTD. The Alternatives Balanced Fund decreased by -5.34% in September and was down ‑15.62% YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, decreasing -7.19% in September; it was down -20.93% YTD.