Jan. 4 (Bloomberg) -- MetLife Inc., the largest U.S. life insurer, headed for its biggest weekly advance since 2011 on the prospect that higher bond yields will improve earnings from the company’s fixed-maturity portfolio.
MetLife climbed 2.5 percent to $35.98 at 10:36 a.m. in New York, the biggest jump in the 80-company Standard and Poor’s 500 Financials Index. The New York-based insurer has rallied 11 percent this week.
The yield on Treasury 10-year notes touched an eight-month high of 1.97 percent earlier today, up from 1.7 percent on Dec. 28. U.S. lawmakers this week averted tax increases for more than 99 percent of households, and Federal Reserve policy makers said yesterday they may end their $85 billion monthly bond purchases sometime this year.
“The path of least resistance in yields seems to be a bit higher now,” said Donald Ellenberger, who oversees about $10 billion as co-head of government and mortgage-backed securities at Federated Investors Inc. in Pittsburgh.
Higher bond yields help MetLife when the company reinvests funds from maturing securities in its $378 billion fixed-income portfolio.