Q for Most Experienced FIA/MYGA Reps
- Thread starter jmhalvo
- Start date
- 10,711
Two words: Federal Reserve. Or maybe 4 words: Federal Reserve/Interest Rates.
Annuity rates in general are largely based on the US 10 Year Treasury Yield.
On a much smaller part they are based on Corporate AAA rates, along with the various other investments within the Carriers General Account.
But mostly the 10 Year Treasury is the main indicator. Because it is what the majority of the Premium dollars go into to cover the Contract Guarantees.
If you look at the 10YT over the past 6 months, you will see that it hit a high of slightly over 3% back in late Dec.
But then it immediately took a nose dive and went below what it had leveled off at before the Dec spike. I think it went back down to around 2.5% or so.
Obviously that abrupt of a movement scared the crap out of the actuaries so they immediately reacted to it.
That is the Technical reason.
But things go a bit deeper than that. We just had a re-crowning at the Fed. Analysts had predicted that Yellen would be more conservative than Bernanke. Because most remarks she made before hand indicated that she felt QE could be contracted even more, as well as possible rises in the Fed Rate in 2015.
But as soon as she took office she announced that she basically wasnt going to do a thing... so 10YT rates shot down.
One reason they had risen was because the Fed had reduced its bond buying program. (not reduced the amount held... just reduced the % bought....)
But another reason that many analysts claimed happened, was anticipation of tightening at the Fed. And that did not happen.
Now, other central banks are talking about expanding their own versions of QE. Which is not a good indicator of that our central bank will tighten their more than they have already.
Artificially low rates are killing the middle class in this country. All the current economic policies do is enhance the wealth of the 1% via the stock market.
- Thread starter
- #3
- 10,711
Market is down, gold is down, UST is down, USD is down, eastern Europe is on the brink of turmoil.... things are just rosy....
Gold is only down because the actual amount of paper gold being shorted against it (and silver) is more than in existence...
The wizard behind the curtain can't hide forever...China and India's appetite for gold is crazy! There will be a huge jump in price, you can't have two of the largest countries in the world devouring gold (both in the public and by the gov't) and not have a price increase.
Soaring Chinese Gold Demand And Its Geopolitical Strategy | Zero Hedge
Plus its getting harder to mine...
The wizard behind the curtain can't hide forever...China and India's appetite for gold is crazy! There will be a huge jump in price, you can't have two of the largest countries in the world devouring gold (both in the public and by the gov't) and not have a price increase.
Soaring Chinese Gold Demand And Its Geopolitical Strategy | Zero Hedge
Plus its getting harder to mine...
Last edited:
