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Impact of insurance premiums on the recent decline of treasuries

Wednesday, May 7th, 2014

According to the Bloomberg bond trader data, the benchmark ten year yields increased to 2.71 percent, this data reports also verified that the thirty year bond yield had decreased significantly to 3.51 percent in April. This in turn has led to assumption that inflation might linger below the Federal Reserve’s target for a while. However, recent studies have also indicated that the Bloomberg US Treasury bond index increased to 0.4 percent in the month of April. Treasuries were observed to have profited, in 1.1 percent on average. Based on the reports of this index the last time that such profits were made by the company was in the year 2010.

The decline of economic growth was also noted, due to the fact that the economy degenerated to 1.2 percent in the first quarter, from 2.6 in the three final months of the year 2013.Based on these observations, it would be unrealistic c for investors to expect the yields to rise suddenly to their benefit. If anything this turn of events indicate that the yields will be more likely to drop than to increase.

Therefore, investors are more likely to benefit if they gain higher yields through investing in longer maturities, which will be beneficial when the economy finally progresses. There is increasing concern that this treasury drops may affect the economy for a very long time. Hence there is need to improve the real life insurance premiums as once this is done the growth domestic product is likely to rise. For this reason, the Federal Reserve policy will keep their interest rate of bank lending at its minimum, this will be done in an attempt to salvage the situation as it is and hopefully, increase the life insurance premium rates which will in turn increase the economic growth.

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