Tuesday, April 18, 2006

And higher yields were so tantalizingly close...

Reinsurance concerns were probably a little dejected today after the stock market rally (which was preceded by the bond rally which was preceded by the Producer Price Index figures, excluding food and energy, coming in below expectations). The 10 year T-bill only hit 5% on Monday to be smashed down once again. The ALM (asset-liability management) issues that RE companies (life reinsurance, especially since the obligations are longer-term) have had to deal with are now back on the table.

Of course, if certain regulatory agencies would remove their restrictions on investments, perhaps chasing yield would not be one of the central focal points for RE firms.

Gold (which some believe acts as a proxy for inflation expectations...I do not take this view) and most of the other metal are going through the roof, Oil is at an all-time high, there is a housing "bubble", etc. Today's rally is more evidence that the U.S. market is the most resilient and vibrant in the world.

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