Comm: Precious

Sales of annuities are soaring with second-quarter sales projected to top $74 billion, according to life insurance industry-funded research firm LIMRA. That figure would top the previous record by more than $5 billion set during the financial crisis in 2008. Sales are being driven by fixed-rate deferred annuities, which offer investors a fixed interest rate on their money over a set period. Sales of fixed-rate deferred annuities are expected to come in between $25 billion and $30 billion, a 75% jump from the first quarter. Fixed-rate annuities are considered the safest annuity that investors can purchase since you can't lose the principal. The volatile market has led investors to seek the safety and guaranteed rates of annuities. Plus, with rates rising, investors can now earn even more.

Finsum: Annuity sales, especially sales of fixed-rate annuities, are expected to reach record levels, driven by rising rates and market volatility.

(New York)

Everyone jumped off the three-month gold rally last week after regional Fed President Jim Bullard spoke of tightening in response to the recent CPI releases. This erased over a month of gains in a week as the price sank from $1900 to nearly below $1780. However, the Hulbert Gold Newsletter Sentiment Index which tracks the average recommended gold exposure among a subset of short-term gold timers is at -9.7%. This contrarian take is that gold rallies when this index sinks. The typical threshold for this index is -14.8%, but the dramatic move could be enough to start to buy. This index is one of the key items to watch as the price of gold falls so that you don’t miss the rebound.

FINSUM: Additionally Powell made it very clear that inflation is transitory and Bullard is in the minority on the FOMC. The Fed won’t pull back the reins until inflation is above its long-term goal and persistent.

(New York)

With the huge CPI number hitting the tape yesterday, gold had a predictable reaction: it rose. Since bottoming out a few months ago in the $1,600 range, it has since risen to over $1,900 as inflation fears have picked up. However, inflation is not the only thing driving the metal, as the Fed is playing a big role too. If the Fed stays dovish, and therefore the path of rates looks to stay low, then gold is in a great position—higher inflation with little rate risk from the Fed.

FINSUM: Gold is in a good spot. The Fed will only start hiking if inflation really jumps, which would push gold higher anyway. If inflation is more mild, then at least their won’t be rate pressure.

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