Home > Library > Stable Times > Volume 3, Issue 2  

Tracking Stable Value Yield Spreads

Yield spreads on fixed income instruments narrowed versus U.S. Treasuries during the first part of the year as continued strength in the U.S. economy made investors more comfortable assuming credit risk. In fact, with the tightening of spreads in recent months, the flight to quality seen during last fall's global financial crisis has largely been reversed. Consequently, spreads are only slightly higher than experienced during the historic lows achieved early last summer. Meanwhile, Interest rates on Treasuries have continued to climb as the Federal Reserve has shifted monetary policy to a tightening bias. Yields on intermediate maturity Treasuries have increased over one full percent through the end of May. GIC's continue to represent good value relative to comparable quality corporate bonds with yield pickups of approximately 20 basis points for five-year maturities.

Read Next: Stable Value COLI/BOLI Products