Eagle Bites July 31

Home Insurance Hikes and Coverage Falls

Home insurers are implementing double-digit premium hikes, higher deductibles, and new coverage limits to regain profitability after experiencing losses in five of the past six years. They are shifting more risk onto homeowners, enforcing stricter underwriting restrictions, and implementing significant rate increases, according to analysts and insurance agents. This trend of higher costs and lower coverage is not limited to states prone to natural disasters, as it appears to be a widespread issue. Despite sharp premium increases, home insurance companies continue to accumulate losses due to various factors such as storms, natural disasters, inflation, and supply-chain challenges leading to increased claims.

S&P 500 and Inflation Rates Continue To Hold Strong

Stocks rose Friday with the Dow Jones Industrial Average and S&P 500 set to close out their third winning week in a row as a measure of inflation closely watched by the Federal Reserve came in at its lowest in nearly two years. This week, investors cheered data showing falling inflation and stronger-than-expected earnings reports that supported the case the U.S. could avoid a recession. On Friday, June data for the personal consumption expenditures price index continued to show easing inflation. The data is of particular interest after the central bank raised interest rates earlier this week in a widely expected move, especially since the Fed targets 2% inflation annually.

 Yellow Shuts Down After Nearly 100 Years

Yellow, a prominent U.S. trucking business, ceased operations due to debt from mergers and a standoff with the Teamsters Union. Despite its long history and involvement in moving freight for major retailers, Yellow struggled to provide consistent service and generate profits. The company’s closure jeopardizes approximately 30,000 jobs, including 22,000 Teamsters members, and resulted in the layoff of nonunion employees when new shipments were halted.

Yen Jumps on Bank of Japan Monetary Policy 

Currently, the Bank of Japan has a Yield Curve Control process, which limits the yields at which certain bonds can trade. For much of the year, JGB (Japanese Government Bonds) have been capped at +/- 50 basis points. However, last week, the Japanese Nikkei Newspaper announced that the BOJ may let longer-dated bonds trade at higher yields. While the head of the BOJ, Governor Ueda, stated that no changes would be made to the YCC at the upcoming meeting, the Yen responded favorably to this news, pushing the dollar down to 139 JPY/USD.

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