By: Russ Kamp, Managing Director, Ryan ALM, Inc.

We are once again pleased to share with you the Ryan ALM, Inc. Newsletter. This edition is a review of 2023. It was a surprisingly good year for Pension America. Markets overcame significant uncertainty related to the Fed’s action related to interest rates, inflation, economic growth, war, etc. Much of the outperformance of plan assets to liabilities is attributable to equities, both domestic and foreign, which enjoyed significantly improved results following 2022’s challenging markets.

US interest rates were on a rollercoaster for a good chunk of the year, as the Fed continued to elevate the FFR to its present level of 5.25%-5.5%. However, during the path upward in the FFR we had markets rocked by the regional banking crisis which sent yields plummeting only to have them reach decade high levels by October. A pause by the Fed with regard to additional FFR increases has convinced many investors that the Fed will now aggressively reduce rates. As a result, the Treasury yields curve dropped since October with most maturities seeing yields plummet by at least 1% to levels below 4%. That action seems premature.

As always, we welcome feedback related to this newsletter. Please don’t hesitate to reach out to us with any questions. We are always available to assist you in thinking through asset/liability issues. May 2024 be your best year yet!