In the fourth quarter of 2024, alternative investments (“alternatives”), on average, had slightly negative returns with Real Estate being a large negative outlier as interest rates moved significantly higher. The Federal Reserve (the “Fed”) continued the path of lowering the Federal Funds Rate, choosing to cut 25 basis points at each of its meetings in the quarter. The U.S. Treasury curve steepened significantly as short maturities followed the decline in Fed Funds Rate, while yields 5 years and longer rose precipitously to completely unwind the rally in rates of the third quarter. Intermediate and long rates are now at levels above where they began 2024. Higher rates are likely the result of significant revision in expected Fed action and bond market participants way of co-opting the Fed's “higher for longer” mantra.  The economic picture domestically remains positive if not spectacular, in our view. Recent inflation data has trended upward, and money supply growth (“M2”) has been positive but concerns over faltering growth in China may be keeping longer-term inflation expectations in check.

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