ARE INTEREST RATES WAITING ON SOMETHING?

I look at this table and think how consistent these rates have been since May. Are they waiting
for something to shock them into orbit, or bring them back down to earth? Or could it be a very
major event happening in November that may be the catalyst?

Then again, I did get my undergraduate degree in political science so perhaps it’s just me
thinking out loud.

As a reminder we update the rates in the middle of the month on our website,
www.brentwoodllc.com

AS EXPECTED, FED HOLDS RATES

The Fed seems committed to a gradual increase in rates and most experts still expect two more
rate hikes before year-end. Most economists agree this is best for an economy exhibiting strong
growth.


And as we can see from the table below annuity rates have followed suit with a gradual increase
over the year.


 

ANNUITY RATES REMAIN STEADY

In our last newsletter we wondered if the rise in interest rates was a trend or just a temporary surge. It’s five weeks and counting now and we’re still at the May 1 levels. So as usual, we’ll see.

As a reminder we update the rates in the middle of the month on our website, www.brentwoodllc.com

We believe that the following rates applied to the mortality scale MP-2017 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

ANNUITY RATES ARE MAKING A MOVE

As can be seen below the rate increase we all expected is slowly but surely happening. There are
many contributing factors and as always the hard part is wondering if this is a trend or just a
temporary spike. We haven’t seen rates this high since December of 2016.

The Tech World

Who would have ever thought that by living daily on Facebook our data was in jeopardy? Okay,
just joking as our millennial children would say, but none of us can be happy about the effect
that and other issues are having on Tech stocks. We in the pension world know that interest rates
are just part of the story and a healthy funding ratio also relies on a healthy stock market. So
let’s hope this turbulence passes soon.


We believe that the following rates applied to the mortality scale MP-2017 will give you a pretty
good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

Tariffs Anyone

If I can remember my Economics 101 tariffs lead to higher prices for goods, higher prices for
goods leads to inflation and inflation leads to higher interest rates. Again, I ask; Tariffs, anyone?

We believe that the following rates applied to the mortality scale MP-2017 will give you a pretty
good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

WHAT’S GOING ON DOWN THERE

Sorry, I couldn’t resist, that’s an inside joke for the Brentwood partners. The actual quote for all you older Pittsburgh Steeler fans is from the great Myron Cope but it works right now with all the volatility we’re seeing in the markets.

We believe that the following rates applied to the mortality scale MP-2017 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

Happy Holidays

Wow, what a year! This is our last newsletter for 2017 but we will be updating the rates in the middle of the month on our website.

The staff at Brentwood wishes you and your families a safe and happy holiday season.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts

Is The Bond Bull Market Coming To An End?

Here’s a link to a very interesting article from Michael Wilson at Bloomberg. If you’re a fan of obscure charting this may be for you.

https://www.bloomberg.com/news/articles/2017-11-06/bond-signal-from-30-year-bullmarket-s-genesis-close-to-reversal

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

AIG Released From Sifi Oversight

With that news only Prudential remains under the “the too big to fail” extended financial oversight. We think this is appropriate especially for PRT. Prudential recently announced International Paper’s $1.3B PRT transaction for retirees with benefits less than 450/mo. We welcome the extra oversight beyond the New Jersey Insurance Commission’s work in light of the huge current trend toward offloading retiree liability.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts

World Events Beyond Our Control

At lease in the short-term we think annuity rates will slip mainly because of tension with North Korea and the impending Hurricane Irma. We all know how popular Treasuries become when a major event like a nuclear exchange hangs in the air.

I can’t believe I actually wrote that last sentence.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

A FED PRESIDENT WANTS TO KEEP RATES ON HOLD

Federal Reserve Bank of St. Louis thinks that because of the "unexpectedly low" price data that we're in a low inflationenvironment and there is no need to raise the interest rates His theory is one we should all monitor to try and get a handle on where the rest of the members are on this issue.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for smaller contracts.

ANNUITY RATES MAKING A MOVE

By looking at the table below it appears that annuity rates have been pretty steady. But in the past three weeks rates have increased by almost 25 BP.  As always we question if this is a trend or just a temporary spike? And as always only time will tell and we all know how world events can quickly change everything.
 
We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

And Now, Qatar

The turmoil in Qatar will have a short-term effect on annuity rates but we don’t expect a lasting effect. If we can all just revisit Economics 101 for a short time we’ll remember that rising oil prices leads to higher inflation that leads to higher interest rates and vice versa.

There that’s over with, carry on with your day.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

MORTALITY, MORTALITY, MORTALITY

It’s nice to know we’re all going to live longer, unless you’re trying to terminate a DB plan.  But I’ll take the former.   
 
We’ve tweaked our annuity rate model and tightened the range from 20 BP to 10.  Always keep in mind our rates apply when a plan sponsor is actually purchasing a GAC not for a preliminary bid where an insurer throws out an artificially high price. 
 
We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts. 

We're Late

We’re late with this newsletter because of our attendance at the EA meeting, and thanks to all of you who came by the booth to say.

Oh and by the way, annuity rates are fading like an actor well past their prime.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

Annuity Rates Level Since the Election

After the election and fed increase in December we're now seeing rates search for level ground. They have been pretty stable for the past month. 

The spending plans for this administration along with increased tariffs historically has led to inflation, and we all know what follows with that.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for smaller contracts.

2016 Annuity Rates Recap

Annuity rates are closely tied to the 10 and 20-year Corporate Bond yields and during the course of the year we saw the following highs and lows. We think deferred annuity rates bottomed out around late August and then picked up about 80 BP and peaking when the Fed increased their rate. Immediate annuity rates increased about 100 BP from late September to shortly after the Fed increase. Since they peaked immediate rates are down about 15 BP and deferred rates about 25 BP. Interestingly immediate and TV rates are almost exactly where they were at the beginning of 2016 with rates for actives down about 20 BP.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

Rates Continue To Rise

It's December and that means we could be seeing the long-awaited and often discussed possible Fed rate increase. Looking at the rates below it appears that the market has already been priced in the expected upturn. 

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.