Key Takeaways

• Global growth bested pessimistic expectations coming into the year and the widely anticipated recession of 2023 never came to fruition.
• The labor market has been a consistent source of economic growth despite a tempering of hiring and a small uptick in the domestic unemployment rate.
• The Fed entered the year committed to fighting inflation above all else, following through with four rate hikes resulting in a Fed Funds rate of 5.5%. Consensus indicates policy rates peaked and cuts are now on the table.
• Inflation fell precipitously across the developed world, bringing more recent year-over-year changes closer to target levels. The focus going forward will likely pivot to prioritize maintaining growth while keeping inflation at bay.

• Miraculously, the S. Treasury 10-year yield ended the year little changed from the start. This incremental change dramatically understates the volatility as the 10-year yield reached ~5%, its highest level since October 2007.
• Defying outlooks, 2023 turned out to be a robust year for investment Global stocks had strong momentum throughout the year, while bond markets benefitted from higher yields and declining rates late in the year.
• U. S. market leadership remained historically narrow and the top 10 securities within the S&P 500 now make up over 30% of the index. This is among the highest concentration levels ever.
• Looking forward to 2024, global equity market valuations have risen and, in many cases, are at or above long-term average levels translating to a neutral view on many stock asset classes.
• Bond markets defied the odds producing healthy results in Starting yields are still compelling in many cases and support a traditional level of exposure to fixed income and duration relative to the past two years.
• Private assets mostly delivered on offering stability and/or enhancing returns in diversified Real estate was a notable laggard, but neutral results served to reset valuations and could support forward performance.
• Expectations for 2024 are in stark contrast to 2023 when a recession was expected with near certainty from many experts. Higher valuations across asset classes and known events, such as the U.S. presidential election, will likely keep investors on their toes once again, but a long-term focus and strategy is often the best assurance for achieving financial goals.