Reso 2025-133 OPEB & Pension Trust Report

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QUARTERLY MARKET SUMMARY For the Quarter Ended June 30, 2025 Multi-Asset Class Management Inflation (U.S.): •Progress has been made towards the Fed’s 2% inflation target over recent months. However, future price pressures from tariffs are expected in coming months. •Fed Chair Powell said that he expects tariffs to impact inflation and that the size, duration, and time of tariff effects are highly uncertain. Economic Growth (Global): •U.S. GDP is expected to grow at a slower pace for rest of the year but uncertainty over economic growth outcomes remains elevated even as higher tariff rates have been paused. •Escalating trade and geopolitical tensions create the potential for slower global growth while fiscal stimulus within Eurozone a positive for growth. Monetary Policy (Global): •The Fed continued to hold the rates unchanged through the second quarter amid healthy labor markets and tariff-induced inflation concerns. Latest dot plot points to two rate cuts before year end. •While inflation continues to cool globally, tariffs add to future inflation pressures and complicate the outlook. Labor Markets (U.S.): •The labor market remains healthy, but signs of labor market cooling have begun to show on the margin particularly through initial and continuing jobless claims. •With hiring and quits rates low, any acceleration in layoffs may result in job seekers remaining unemployed for longer. Consumer Spending (U.S.): •Sentiment has remained subdued as consumers continue to expect higher prices and weaker labor market conditions. Tax extension support is a positive while higher prices are a negative. •A material deterioration of labor market conditions remains the biggest risk factor to consumer spending. Financial Conditions (U.S.): •Even after the recent bout of volatility, risk and credit conditions still point to the stability of financial conditions. •The evolving fiscal landscape and persistent uncertainty may lead to tightening financial conditions over the next 6-12 months especially if inflation and growth concerns take hold. Political/Policy Risks: •Geopolitical conflict in the Middle East and other regions remains a source of concern. •Deglobalization and global trade and tariff policy risks continue to create market uncertainty and strained relationships with major trading partners for the U.S. Valuations: •U.S. equities and credit markets sold off due to reciprocal tariffs in April but have recovered most of the losses over the quarter, bringing them back into expensive valuations relative to history. •We believe that economic and policy risks are not fully reflected in the current valuations. Corporate Fundamentals: •Earnings growth expectations are positive across global equities, but expectations within U.S. have seen a pullback over the course of this year. •In the U.S., any deregulation initiatives are positives while tariff/cost pressure impact on both earnings growth expectations and profit margins needs attention. Factors to Consider Over the Next 6-12 Months Statements and opinions expressed about the next 6-12 months were developed based on our independent research with information obtained from Bloomberg. The views expressed within this material constitute the perspective and judgment of PFM Asset Management, a division of U.S. Bancorp Asset Management, Inc., at the time of distribution (June 30, 2025) and are subject to change. Information is obtained from sources generally believed to be reliable and available to the public; however, we cannot guarantee its accuracy, completeness, or suitability. Stance Unfavorable to Risk Assets Stance Favorable to Risk Assets Current outlook Outlook one quarter ago PositiveSlightly Positive NeutralSlightly Negative Negative 2.8 Resolution No. 2025-133 Exhibit A Page 11 of 26