Considering derivatives for smoothing earnings and managing interest rate risk
- June 3, 2021
Head of Sales
Financial Institutions | Denver, CO
As financial institutions continue to search for opportunities for more earnings in this low-rate environment, it is important to consider the value of adding derivatives to your strategy. Ben Lewis discussed this and more with C. Myers in a recent podcast.
Are you interested in learning more?
Contact us to learn more about interest rate hedging strategies.
Our featured insights
Yields fall, ARRC launches “SOFR first” initiative
The major U.S. equity indices ended the week mixed with the tech-heavy Nasdaq Composite Index faring the best as updates to the Consumer Price Index and infrastructure bill negotiations in Washington dominated headlines in a week with few economic data updates and a speaking engagement blackout for Federal Reserve officials.
Increase lending capacity
Many financial institutions have excess liquidity due to the global pandemic and resulting economic stimulus. Management can deploy this liquidity into new loan originations or the investment portfolio. Although bond returns are better than cash, a more attractive return may be provided from mortgage loans.
May employment report falls short of expectations
In a holiday-shortened week, the major U.S. equity indices moved higher as the scheduled release of several high-profile economic indicators, continued negotiation of the proposed infrastructure bill, and wild trading in retail-trader-favored equities dominated headlines and captivated the attention of market participants.
Senate Republicans unveil $928 billion infrastructure counterproposal
The major U.S. equity indices pushed higher for the week with the S&P 500 notching a modest month-over-month gain amid mixed economic data, continued negotiation of the American Jobs Plan, and an improved COVID-19 outlook in the U.S.
Fed minutes turn heads
The major U.S. equity indices ended the week mixed with the S&P 500 suffering its second consecutive weekly decline as weaker-than-expected economic data and fears of an earlier-than-expected end to the Federal Reserve’s asset purchase program dampened investor sentiment and outweighed optimism about the coming end of the COVID-19 pandemic and a resurgent U.S. economy.
NCUA finalizes more flexible derivatives rules
The National Credit Union Administration (NCUA) Board approved the modernization of its existing derivatives rules, making them more principles-based and flexible for federal credit unions (FCUs) to manage interest rate risk. These regulatory changes remove the lengthy application process and...
Interest Rate Hedging Strategies for Credit Unions
In this webinar, we will review the recent changes to the NCUA’s rules for derivatives and discuss hedging strategies that credit unions can apply to manage their interest rate risk. We will identify the advantages of adding derivatives to the ALCO toolkit while also considering some challenges...