Pension funds in trouble

Back in 2000 when the dot-com bubble bursted, Fed quickly lowered interest rates thus creating another bubble waiting to be bursted in just a few years time ie 2007, stock market peaking out, 2008, the Lehman crisis.

During these times, pension funds (esp defined benefits type) become underfunded because of stock market performance and low rates of return from the bond market, many have resorted to leverage to make returns better so pensioners can receive full amounts as promised.

This round of rate hikes by the Fed is fast and furious.

Such pension funds do not yet have time to adjust their portfolio as well as their leverage, many are now suffering heavy losses and likely cannot commit to paying their promised benefits if interest rate environment remains elevated.  Some might even be forced to liquidate certain positions to reduce leverage which means severe fund shortage in the years ahead.

Many such happenings are below the radar and rarely reported in the media.