The markets tanked when the Fed announced its launch of Operation Twist, the exchange of $400 billion short-term Treasuries for long-term Treasuries of the same amount.
Can you imagine how the Treasury cameup with this title? The SEC must be having a field day. It sounds like the Fed just recovered Chubby Checkers 60s classic, “Let’s Twist Again.”
“We’ll be twisting the night away,” as the song goes. But it will be more like writhing in the wind. The American flag not fluttering in majesty, but snapping on the pole of a hurricane howl.
We’re looking like Japan in the 90s. Oh, for the days of the gold standard.
Enough reminiscing. Ready, set, go. Let the fixed annuity fire sales begin!
Start compiling a list of your CD and cash equivalent clients. Those fixed rate savers are going to want
to lock down 10-year positions like there's no tomorrow. And while they're locking down today's rates, they might as well as refinance their mortgages.
Think about it: Inflation
could outpace 10-year Treasuries. Now I’m sweating!
When and where will the rates bottom out? Long term permanent life insurance
never looked so good. Oh, sorry this is an annuity blog.
The fire sale for fixed annuities is going to burn red hot and then flame out. Talk about annuity carrier disintermediation. No one sold short to cover this.
It’s going to be indexed annuities or nothing. If you thought indexed annuities
were hot, they’re going combustible! Trade in your CD/ annuity comparison software for one that features the S&P 500 versus tax-deferred indexed annuity (yet to be invented).