LDI - A Statistical and Qualitative Review of Q4 2014 & Outlook for 2015

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Q4 2014

Andrew Catalan, CFA

Andrew Catalan, CFA - Managing Director & Senior Portfolio Manager of the Liability Driven Investing group

Key Q4 Takeaways:

  • The U.S. economic recovery accelerated through Q3 2014, and credit fundamentals remain strong
  • The Fed has emphasized the term “normalization” to prepare the markets for its first rate hike, around mid-2015
  • Weak global fundamentals may well keep a lid on U.S. Treasury rates
  • Declines in long term rates have taken pension plans’ funded status a step back from 2014 levels
  • Anticipated rate hikes and recent spread widening have increased valuation dispersions, opening some opportunities in the market

“The committee considers it unlikely to begin the normalization process for at least the next couple of meetings,”
“Does a couple mean two?” “I believe the dictionary probably says a couple means two, so a couple means two.”
-Janet Yellen and an unidentified reporter

Couple: noun, two of a kind; a pair.
-Webster’s Collegiate Dictionary of the English Language




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