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Factors to Consider for 6 -12 Months <br />PFM Asset Management LLC <br />© PFM Asset Management LLC | pfmam.com <br />For the Quarter Ended March 31, 2022 <br />California Affiliated Risk Management Authorities Market Update <br />For the Quarter Ended June 30, 2024 <br />Market Update <br />Current outlook Outlook one quarter ago Negative Slightly <br />Negative <br />Neutral Slightly <br />Positive <br />Positive <br />Statements and opinions expressed about the next 6-12 months were developed based on our independent research with information obtained from Bloomberg and FactSet. The views expressed within <br />this material constitute the perspective and judgment of PFM Asset Management LLC at the time of distribution (6/30/2024) and are subject to change.Information is obtained from sources generally <br />believed to be reliable and available to the public; however, PFM Asset Management LLC cannot guarantee its accuracy, completeness, or suitability. <br />Monetary Policy (Global): <br />•The Fed remains data dependent. Recent Fed <br />guidance has been revised from three rate cuts <br />to one rate cut in 2024. Markets currently <br />expect one or two cuts. <br />•Globally, major central banks have begun <br />easing cycle with rate cuts leading to <br />divergence from Fed policy. <br />Economic Growth (Global): <br />•U.S. economic growth remains resilient but <br />there has been some softness recently as <br />consumer spending tapers. <br />•Economic growth outside U.S. remain mixed <br />with slower but improved growth projected in <br />Eurozone and continued growth projected in <br />emerging markets. <br />Inflation (U.S.): <br />•The latest inflation reading has revived market <br />confidence that inflation is heading in the right <br />direction after experiencing broad disinflation <br />across both goods and services. <br />•Despite the progress on inflation, policymakers <br />would like more data to confirm the downward <br />trend. <br />Financial Conditions (U.S.): <br />•Market measures, such as narrow corporate <br />yield spreads, record equity index levels and <br />low volatility, reflect economic confidence. <br />•With interest rates elevated and the gradual <br />normalization of labor markets and the <br />consumer, we continue to focus on identifying <br />potential catalysts for a broader slow down. <br />Consumer Spending (U.S.): <br />•The consumer has begun to exercise caution <br />and limit spending, which has shed light on a <br />notable downshift over recent months. <br />•Moderation in the pace of overall spending is <br />expected to continue given persistent inflation, <br />reduced/lower savings, and a cooling job <br />market. <br />Labor Markets: <br />•The labor market normalization has begun. <br />After the pandemic-led jolt, the labor force <br />participation rate and non-farm payrolls have <br />moved to be in line with long-term averages. <br />•With the quits rate and excess demand for <br />workers reaching a better balance, this should <br />help cool wage pressures and inflation. <br />6.B. - Page 31 of 65 <br />45