The following market commentary provides context for the investment performance of your charitable assets.

From Cambridge Associates, investment advisor

Global equities (+6.6% for the MSCI All Country World Index) advanced in third quarter 2024. Monetary easing from several major central banks and a weaker economic outlook led to a rotation favoring value over growth strategies. Global investment-grade bonds (+7.0% for the Bloomberg Global Aggregate Bond Index) posted their third-largest gain in more than two decades, driven by moderating inflation and falling interest rates.

US equities (+5.8% for the MSCI US Index) trailed developed markets (DM) ex US peers (+7.8% for the MSCI World ex US Index) in the third quarter, although the United States outperformed in local currency terms due to dollar weakness. The Federal Reserve reduced its target range for the federal funds rate by 50 basis points (bps), marking the first reduction in more than four years as inflation cooled to 2.2%. The labor market softened but remained strong relative to history.

Major DM ex US equity regions broadly gained. Pacific ex Japan (+14.3%) outpaced other markets, boosted by Hong Kong (+24.4%), which benefited from China’s stimulus announcement. Notably Singapore (+17.6%) and Australia (+11.5%) also advanced by double digits. Canada (+12.0%) sharply advanced as the Bank of Canada cut its key overnight rate target by 50 bps over two meetings as excess supply in the economy curbed inflation. The United Kingdom (+7.9%) outperformed on firming economic data, whereas Europe ex UK (+6.2%) trailed broader DMs amid declining business activity and weaker growth outlook. Japan (+5.7%) lagged the most as its central bank raised interest rates to 0.25% and mixed messaging from officials left investors uncertain about the future of Bank of Japan (BOJ) policy.

Emerging markets (+8.7% for the MSCI Emerging Markets Index) outperformed developed peers, boosted by Chinese equities (+23.5%), which experienced a significant rally in late September following the back-to-back surprise stimulus measure announcements from the People’s Bank of China and Politburo. This led EM Asia equities (+9.5%) to outpace the broader market.

US fixed income (+5.2% for the Bloomberg US Aggregate Bond Index) advanced by its second highest quarterly rate since 1995. Optimism for a Fed rate cut drove returns for most of the quarter. Two-year Treasury yields declined by 105 bps to 3.66%, while ten-year Treasury yields fell 55 bps to 3.81%, leading the ten-year/two-year yield curve to turn positive for the first time in two years. Investment-grade corporates (+5.8%) outpaced high-yield equivalents (+5.3%), while nominal Treasury bonds (+4.7%) edged inflation-protected TIPS (+4.1%).

The US dollar broadly weakened as the Fed began rate cuts. The US Dollar Index experienced one of its steepest quarterly declines since the Global Financial Crisis, falling to its lowest month-end level in more than two years. Over the last 12 months, the US dollar is weaker versus all major currencies we track.