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“Additionally, we are re-weighting the current asset allocation for new money investments in Japan. You’ll recall at the analyst meeting, we discussed that our plan was to designate two-thirds of our new money to U.S. corporate bonds and one-third to JGBs.
Our investment team is revisiting our asset allocation for new money investments and expressed to allocate the majority of the third quarter cash flows to JGBs and underweight in the allocation of the U.S. corporate bond hedge.”
“So in our view from a tactical standpoint we’re in a volatile interest rate environment and I should say, Japan as well, because of their Central Bank policies we saw deals on April 5th plum it and then come back up, and they think if Japan is successful there’ll be some pressure on their rates too…We made the tactical decision to sit on the sidelines for now, re-weight that allocation more heavier towards JGBs for the third quarter and let’s see what happens with the Federal Reserve in September.”