b'INVESTMENT ENVIRONMENT, CONT.This positive momentum continued into the first half of 2024, with the Russell 3000 Index gaining 10.0% in Q1 and 3.2% in Q2. Market gains were concentrated in a few large-cap stocks, highlighting narrow market breadth. Developed international equities underperformed U.S. markets over the same time period, with the MSCI EAFE Index returning 5.8% in Q1 and -0.4% in Q2 due to economic challenges and monetary policy changes in Europe.Fixedincomemarketsfacedheadwindsamidshiftingexpectationsfor monetary policy and inflation. In Q3 2023, the Bloomberg U.S. Aggregate Bond Index returned -3.2% as Treasury yields rose and the yield curve became less inverted. The fourth quarter saw a rebound, with the index gaining 6.8%, as moderating inflation and hopes for a more accommodative Federal Reserve stance improved investor sentiment.In the first half of 2024, fixed income returns were mixed. Persistent infla-tion and strong labor markets led to rising yields, with the 10-year Treasury yield ending Q1 at 4.2% and Q2 at 4.4%. The Bloomberg U.S. Aggregate Bond Index returned -0.8% in Q1 and 0.1% in Q2. The yield curve remained inverted throughout the year, signaling concerns about long-term economic growth.Inflation remained a central focus for policymakers. The Consumer Price Index (CPI) was 3.7% in September 2023 due to rising energy prices but moderated to 3.0% by June 2024. The Federal Open Market Committee (FOMC) raised interest rates by 25 basis points in Q3 2023 and indicated a cautious approach to future policy changes, emphasizing the need for greater confidence in declining inflation.Expectations for rate cuts fluctuated during the year. In late March 2024, the FOMC planned for three rate cuts during the year, but by Q2 2024, projections indicated only one expected rate cut by year-end. The dot plot released by the FOMC showed dispersion in rate forecasts among members.The labor market remained robust, with unemployment at 3.7% by the end of 2023. Economic indicators were mixed: manufacturing Purchasing Managers Index (PMI) remained in contraction, while services PMI stayed expansionary. Corporateearningswereresilient,contributingtopositivemarketperfor-mance.Global economic forecasts projected moderate growth. The Organization for EconomicCo-operationandDevelopment(OECD)anticipatedworldGDP growth of 2.9% in 2024 and 3.0% in 2025. The World Bank projected global GDP growth of 2.6% in 2024 and 2.7% in 2025. Inflation was expected to decrease gradually but remained above target levels.98 LAFPP ANNUAL REPORT 2024'