2 years ago

129

US Treasury Rates Are Down!
MYG Annuity Carriers Reacts with large rate reduction with only 2 day notice?

A quick look a what just happened!

Rates reduce 0.80% on some terms since highs!

Links:
U.S. DEPARTMENT OF THE TREASURY: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView

CNBC U.S. 1 YEAR TREASURY:
https://www.cnbc.com/quotes/US1Y

Treasury rates and fixed annuity rates are related because they are both influenced by the same economic factors, such as inflation, interest rates, and market conditions. When Treasury rates increase, the rates of other fixed income products, including fixed annuities, also tend to increase. This is because fixed annuity rates are often tied to the yield on high-quality fixed income securities, such as government bonds.

Insurance companies use the premiums they collect from fixed annuities to invest in a variety of assets, including Treasuries and other fixed income securities. When Treasury rates rise, the insurance companies can earn higher yields on their investments, which allows them to offer higher interest rates on fixed annuities.

Conversely, when Treasury rates decrease, the rates on fixed annuities may also decrease because insurance companies have less opportunity to earn returns on their investments. In summary, Treasury rates and fixed annuity rates are connected because both are influenced by similar market conditions and investment opportunities.

Corporate bond rates and fixed annuity rates are both interest rates, and they are connected through the broader economy's interest rate environment.

When a corporation issues bonds, it offers a fixed interest rate to investors in return for the investors' purchase of the bonds. The bond's interest rate is typically tied to the prevailing interest rates in the broader economy, and thus, corporate bond rates tend to move in tandem with interest rates.

Fixed annuity rates, on the other hand, are offered by insurance companies to individuals looking for a guaranteed stream of income in retirement. Insurance companies typically invest the premiums they receive from their annuity holders in a variety of assets, including corporate bonds. The rate of return that an insurance company earns on its investments will, in turn, affect the interest rate it can offer on its fixed annuities.

Therefore, when corporate bond rates rise, the rate of return that insurance companies earn on their bond investments also rises, and this can lead to an increase in the interest rates offered on fixed annuities. Conversely, if corporate bond rates fall, the rates offered on fixed annuities may also fall.

Overall, the relationship between corporate bond rates and fixed annuity rates is a reflection of the broader interest rate environment in which they both operate.

IMPORTANT INFORMATION: This material is for informational or educational purposes & is not a recommendation to buy, sell, hold or rollover any asset. It does not take into account the specific financial situation, investment objectives, or need of an individual person. Withdrawals may be subject to ordinary income taxes and, if made prior to age 59½, may be subject to a 10% IRS penalty. Surrender charges may also apply. All guarantees are backed by the claims-paying ability of the issuer. Available in jurisdictions where approved.

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