Something had to be done unless the life companies wanted to be left with only term insurance to sell in circumstances where customers were creating their own "permanent life insurance" by combining the high
money market yields with term policies.
First, low short interest rates and bond yields have encouraged cheap borrowing and enabled private equity specialists to leverage themselves up and to purchase companies on valuations that exploit the difference between
money market yields and earnings yields.
In the City, where short-term
money market yields moved sharply higher, the debate centred largely on the timing of any upward move.
Under the current low interest-rate environment, managing 10 billion yen overnight in the call
money market yields only 200 yen, according to the officials.
The sheer weight of liquidity pumped into stocks, low
money market yields, share buy-backs, corporate restructuring, mega-mergers and strong earnings are underpinning equities.
In the intermediate term, M2 velocity--nominal income divided by the stock of M2--tended to vary directly with the difference between
money market yields and the return on M2 assets--that is, with its short-term opportunity cost.
Have changes in interest rates, for example, been reasonable in relation to changes in new
money market yields? If bonuses are illustrated for new policies, is the company setting up reserves for such bonuses or have similar bonuses been paid on any existing contracts?
Tired of
money market yields but afraid to relinquish security?
Analysts said the market opened in the green zone, but institutional profit-taking spurred by economic uncertainty, security concerns in the country and rise in
money market yields dragged it into the negative zone.
However, some research analysts say
money market yields and government borrowing may force the central bank to enhance the key rate but growing consensus us it may decide to maintain the policy rate.
Many larger and well-capitalized credit unions are reporting very strong deposit inflows, but those with low capital levels are discouraging deposits by lowering CD and
money market yields, CUNA Mutual said.
