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Midland National will stop taking new applications for their MYG product line effective 03/03/09. Any thoughts?
Midland National MYG Annuities
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I got the same email from them and their sister, NACOLAH.
They drastically dropped rates on these products on Feb 23 and now are suspending sales of them.
I have to assume it has to do with short term, 5 year and less, investment opportunites and interest rates on Treasuries. 5 year Treasury Notes are auctioning at under 2%, and two weeks ago these companies were offering 5 year MYG Annuities at 5%. It doesn't take a bean counter to figure out that the short term stuff sucks.
They drastically dropped rates on these products on Feb 23 and now are suspending sales of them.
I have to assume it has to do with short term, 5 year and less, investment opportunites and interest rates on Treasuries. 5 year Treasury Notes are auctioning at under 2%, and two weeks ago these companies were offering 5 year MYG Annuities at 5%. It doesn't take a bean counter to figure out that the short term stuff sucks.
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Absolutely correct. A great many of the short term products will be up for reveiw with the other companies in the coming months.
Saw this a few minutes ago on Bloomberg's site:
U.S. Treasuries Fall for Third Day on Spending, Supply Concern
Email | Print | A A A
By Susanne Walker
Feb. 26 (Bloomberg) -- Treasuries fell for a third day as the government sold $22 billion of seven-year notes in the last of three auctions this week as it issues an unprecedented amount of debt to spur the U.S. economy.
Declines were led by 10- and 30-year securities. President Barack Obama’s administration forecast a budget deficit of $1.75 trillion in the fiscal year ending Sept. 30. That’s 23 percent higher than a forecast by economists at primary dealer Goldman Sachs Group Inc., and equivalent to about 12 percent of the nation’s gross domestic product.
“This mountain of supply isn’t going to go away any time soon,” said Kevin Flanagan, a Purchase, New York-based fixed- income strategist for Morgan Stanley’s individual-investor clients. “If Obama or Congress cannot offset some of the spending with tax increases, or in cutting back on other spending, then the difference has to be made up with Treasury issuance.”
The 10-year note’s yield rose seven basis points, or 0.07 percentage point, to 3.00 percent at 5:05 p.m. in New York, according to BGCantor Market Data. It slid to a record low of 2.04 percent on Dec. 18 and averaged 4.65 percent in the past decade. The 2.75 percent security due February 2019 fell 18/32, or $5.63 per $1000 face amount, to 97 30/32.
The 30-year bond yield increased eight basis points to 3.67 percent. The two-year note yielded 1.09 percent after touching 1.11 percent, a three-month high.
U.S. stocks declined, with the Standard & Poor’s 500 Index falling 1.6 percent after earlier gaining as much as 1.9 percent.
‘It Never Ends’
Treasuries pared losses after today’s seven-year note sale yielded 2.748 percent, compared with an average forecast of 2.715 in a Bloomberg News survey of seven trading firms. The government last issued seven-year notes in April 1993, when it sold $9.76 billion at a yield of 5.58 percent.
The seven-year auction’s so-called bid-to-cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, was 2.11. Indirect bidders, a class of investors that includes foreign central banks, were awarded 38.7 percent of today’s sale. Comparable data is not available from the government.
The government sold a record $94 billion of notes this week.
“The biggest difficulties will be in the next few seven- year auctions,” said William O’Donnell, a U.S. government bond strategist at UBS Securities LLC in Stamford, Connecticut, one of the 16 primary dealers required to bid at Treasury auctions. “We’re going to get a very hefty slug of supply. As the saying goes, if you miss an auction this week, you’ll get another auction next week. It never ends.”
Possibility of Default
The U.S. is borrowing so much that it may have trouble paying the money back, said Jaemin Cheong, a bond trader in Seoul at Industrial Bank of Korea, the nation’s largest lender to small- and mid-sized companies.
“Yields are headed higher,” Cheong said in an interview. “More issuance will be needed to support the economy. The possibility of default is more and more as time passes.”
The government is depending on overseas investors to help fund its $787 billion economic plan. China is the largest overseas holder of Treasuries, with $696.2 billion, followed by Japan, with $578.3 billion.
The administration forecast gross domestic product to shrink 1.2 percent in 2009, followed by 3.2 percent expansion in 2010. That’s more optimistic than economists’ estimates for a 2 percent contraction this year and 1.8 percent growth next year, according to the median forecast in a Bloomberg News survey.
The White House forecast an annual average yield for 10-year Treasury notes of 2.8 percent this year and 4 percent in 2010.
China’s Three Elements
The 10-year note yield will reach 3.08 percent by the fourth quarter of this year, according to the weighted average of 58 economists surveyed by Bloomberg News, and 3.69 percent by the second quarter of 2010, according to the weighted average of 43 economists.
China’s top banking regulator said today the country will pay attention to safety, liquidity and profitability when deciding whether to buy more U.S. debt.
“How much we will invest in U.S. Treasuries will depend on the three elements,” said China Banking Regulatory Commission Chairman Liu Mingkang at a press conference in Beijing.
Losses by U.S. Treasuries are 0.3 percent in February and 3.4 percent so far in 2009, compared with a 1.7 percent gain in the same period a year ago, according to Merrill Lynch & Co.’s U.S. Treasury Master Index.
The yield gap between two- and 10-year notes widened by four basis points to 1.91 percentage points.
TED Spread
Money markets show the world’s biggest banks see no recovery before 2010.
The so-called Libor-OIS spread, a measure of banks’ reluctance to lend, rose above 1 percentage point last week for the first time since Jan. 9. Contracts traded in the forward market indicate the gauge will remain higher for the rest of the year than before Sept. 15, when the bankruptcy of Lehman Brothers Holdings Inc. froze credit markets.
The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, rose to 99 basis points from 91 basis points on Feb. 10.
U.S. Treasuries Fall for Third Day on Spending, Supply Concern
Email | Print | A A A
By Susanne Walker
Feb. 26 (Bloomberg) -- Treasuries fell for a third day as the government sold $22 billion of seven-year notes in the last of three auctions this week as it issues an unprecedented amount of debt to spur the U.S. economy.
Declines were led by 10- and 30-year securities. President Barack Obama’s administration forecast a budget deficit of $1.75 trillion in the fiscal year ending Sept. 30. That’s 23 percent higher than a forecast by economists at primary dealer Goldman Sachs Group Inc., and equivalent to about 12 percent of the nation’s gross domestic product.
“This mountain of supply isn’t going to go away any time soon,” said Kevin Flanagan, a Purchase, New York-based fixed- income strategist for Morgan Stanley’s individual-investor clients. “If Obama or Congress cannot offset some of the spending with tax increases, or in cutting back on other spending, then the difference has to be made up with Treasury issuance.”
The 10-year note’s yield rose seven basis points, or 0.07 percentage point, to 3.00 percent at 5:05 p.m. in New York, according to BGCantor Market Data. It slid to a record low of 2.04 percent on Dec. 18 and averaged 4.65 percent in the past decade. The 2.75 percent security due February 2019 fell 18/32, or $5.63 per $1000 face amount, to 97 30/32.
The 30-year bond yield increased eight basis points to 3.67 percent. The two-year note yielded 1.09 percent after touching 1.11 percent, a three-month high.
U.S. stocks declined, with the Standard & Poor’s 500 Index falling 1.6 percent after earlier gaining as much as 1.9 percent.
‘It Never Ends’
Treasuries pared losses after today’s seven-year note sale yielded 2.748 percent, compared with an average forecast of 2.715 in a Bloomberg News survey of seven trading firms. The government last issued seven-year notes in April 1993, when it sold $9.76 billion at a yield of 5.58 percent.
The seven-year auction’s so-called bid-to-cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, was 2.11. Indirect bidders, a class of investors that includes foreign central banks, were awarded 38.7 percent of today’s sale. Comparable data is not available from the government.
The government sold a record $94 billion of notes this week.
“The biggest difficulties will be in the next few seven- year auctions,” said William O’Donnell, a U.S. government bond strategist at UBS Securities LLC in Stamford, Connecticut, one of the 16 primary dealers required to bid at Treasury auctions. “We’re going to get a very hefty slug of supply. As the saying goes, if you miss an auction this week, you’ll get another auction next week. It never ends.”
Possibility of Default
The U.S. is borrowing so much that it may have trouble paying the money back, said Jaemin Cheong, a bond trader in Seoul at Industrial Bank of Korea, the nation’s largest lender to small- and mid-sized companies.
“Yields are headed higher,” Cheong said in an interview. “More issuance will be needed to support the economy. The possibility of default is more and more as time passes.”
The government is depending on overseas investors to help fund its $787 billion economic plan. China is the largest overseas holder of Treasuries, with $696.2 billion, followed by Japan, with $578.3 billion.
The administration forecast gross domestic product to shrink 1.2 percent in 2009, followed by 3.2 percent expansion in 2010. That’s more optimistic than economists’ estimates for a 2 percent contraction this year and 1.8 percent growth next year, according to the median forecast in a Bloomberg News survey.
The White House forecast an annual average yield for 10-year Treasury notes of 2.8 percent this year and 4 percent in 2010.
China’s Three Elements
The 10-year note yield will reach 3.08 percent by the fourth quarter of this year, according to the weighted average of 58 economists surveyed by Bloomberg News, and 3.69 percent by the second quarter of 2010, according to the weighted average of 43 economists.
China’s top banking regulator said today the country will pay attention to safety, liquidity and profitability when deciding whether to buy more U.S. debt.
“How much we will invest in U.S. Treasuries will depend on the three elements,” said China Banking Regulatory Commission Chairman Liu Mingkang at a press conference in Beijing.
Losses by U.S. Treasuries are 0.3 percent in February and 3.4 percent so far in 2009, compared with a 1.7 percent gain in the same period a year ago, according to Merrill Lynch & Co.’s U.S. Treasury Master Index.
The yield gap between two- and 10-year notes widened by four basis points to 1.91 percentage points.
TED Spread
Money markets show the world’s biggest banks see no recovery before 2010.
The so-called Libor-OIS spread, a measure of banks’ reluctance to lend, rose above 1 percentage point last week for the first time since Jan. 9. Contracts traded in the forward market indicate the gauge will remain higher for the rest of the year than before Sept. 15, when the bankruptcy of Lehman Brothers Holdings Inc. froze credit markets.
The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, rose to 99 basis points from 91 basis points on Feb. 10.
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Great article; thanks for sharing.
