Reso 2026-061 2025 Q4 OPEB Trust & Pension Trust Investment Report

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QUARTERLY MARKET SUMMARY For the Quarter Ended December 31, 2025 Multi-Asset Class Management Inflation (U.S.): •While headline inflation moved lower in Q4, significant gaps in data collection due to the U.S. government shutdown likely biased the data lower and warrants attention. •Lower shelter inflation continues to support disinflation going forward although goods prices continue to experience tariff passthroughs. Economic Growth (Global): •Benefits from the tax and reconciliation bill and increases in anticipated AI capex are expected to support U.S. growth in 2026. •The effects of U.S. government shutdown expected to be temporary and fully recouped in Q1 2026. •Strong consumer spending and steadier trade dynamics continue to support global growth. Monetary Policy (Global): •The Fed cut rates by 50 bps in Q4 but noted continuing challenges in achieving its dual mandate. •Markets view policy risks as skewed towards additional easing, assuming a more dovish Chair takes office in mid-2026 as expected. •Major central banks have an accommodative policy in place with the BOJ being the notable exception. Labor Markets (U.S.): •Labor market conditions continued to cool with net new job creation close to zero. Initial jobless claims and layoff rates remain low, easing some concerns over labor weakness. •The unemployment rate continued to tick higher, while job openings declined and the quits rate remains subdued, signaling reduced worker leverage even as real wage growth remains positive. Consumer Spending (U.S.): •Consumer activity remained resilient through the holiday shopping season, highlighting the disconnect between slowing sentiment and activity. •Consumer spending is dominated by higher-income cohorts pointing to K-shaped economy. •A significant correction in the equity market or a material slowdown in the labor market are the largest threats to consumer spending. Financial Conditions (U.S.): •Financial conditions eased as corporate earnings exceeded expectations and tariff concerns abated resulting in equities reaching new all-time highs and credit spreads tightening to historical lows. •Financial conditions expected to remain tailwind as monetary policy eases,but any fiscal uncertainty and geopolitical risks could reintroduce tighter financial conditions over the next 6-12 months. Political/Policy Risks: •Some of the policy and trade related uncertainty was resolved in 2025. •The possibility of another U.S. government shutdown, legal challenges to tariffs and ongoing geopolitical uncertainty are negatives. Valuations: •U.S. equities and credit markets trade at valuations that are expensive relative to their history. •Resilient growth, strong earnings growth and higher profit margins are supportive of the current valuations while inflation and AI related exuberance are not fully reflected in the current valuations. Corporate Fundamentals: •Earnings growth expectations are positive across global equities with double digit growth expected across U.S. and international equity benchmarks. •In the U.S., M&A and capital spending pickup, tax changes and rate cuts are positives while any tariff related cost pressures need to be monitored. 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 (December 31, 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 PositiveNeutralSlightly NegativeNegative 2.8 Exhibit A Resolution No. 2026-061