Link:https://content.naic.org/sites/default/files/capital-markets-hotspot-New-Inflation-High-Feb-2022.pdf
Graphic:
Excerpt:
While U.S. insurance companies have adapted to investing in a world of low interest rates, they are now
also facing the challenge of investing in a high inflationary environment whereby yields may not be
providing adequate returns on investment on an inflation-adjusted basis. Using a similar approach to
estimating real interest rates in Chart 1, we estimate how corporate bond yields are holding up against
high inflation….
Graph 3 shows similar data for BBB-rated corporate bonds. With BBB yields generally higher than A
yields, the difference between the two measures has been negative for a shorter period of time. Real
yields did not turn negative until May 2021, and they dipped to almost -1% in December 2021.
Author(s): Michele Wong and Jennifer Johnson
Publication Date: 15 Feb 2022
Publication Site: NAIC Capital Markets Bureau Hot Spot