Global markets advanced in the third quarter of 2025, supported by steady growth, resilient corporate earnings, and a modest turn toward monetary easing. The Federal Reserve lowered its policy rate by 25 basis points in September—the first cut in 2025—while inflation remained above target but broadly stable, reinforcing investor confidence in a soft-landing outlook.

U.S. equities posted strong gains, with the S&P 500 rising 8.1% for the quarter. Growth-oriented sectors, particularly technology and communication services, led performance, while energy shares lagged amid weaker oil prices and softening earnings expectations. Small-capitalization stocks outperformed, with the Russell 2000 up 12.4%, supported by improving credit conditions and firm domestic demand.

International equities added to global strength. The MSCI EAFE Index gained 4.8%, supported by stable currencies and improving business sentiment in Europe and Japan. Emerging markets outperformed developed peers, with the MSCI Emerging Markets Index advancing 10.6% on stronger exports, selective policy easing, and renewed capital inflows. The broader MSCI ACWI ex U.S. Index rose 6.9%.

Fixed-income markets delivered positive total returns as yields declined modestly and credit spreads narrowed. The Bloomberg U.S. Aggregate Bond Index returned 2.0%, supported by demand for duration and expectations of further policy accommodation. High-yield credit outperformed investment-grade debt, with the Bloomberg U.S. Corporate High Yield Index up 2.5%, reflecting healthy risk appetite and limited default activity. The 10-year U.S. Treasury yield ended September at 4.1%, down from 4.4% at the start of the quarter.

Commodities were mixed but generally positive. The Bloomberg Commodity Index gained 4.0%, led by strength in precious metals and agriculture. Gold rose roughly 16% on safe-haven demand and lower real rate expectations, while crude oil declined about 6% amid higher inventories and softening global demand.

As of September 30, 2025, OCERS’ portfolio had a market value of $27.0 billion, up from $25.8 billion at the end of the second quarter. OCERS’ portfolio generated a quarterly return of 5.0% relative to the policy benchmark return of 5.2%.