NCUA’s derivatives rule could be boon for large credit unions

Despite a hot employment report and hawkish Federal Reserve commentary, Treasury yields reversed course and headed lower as Congress passed the Biden/McCarthy debt ceiling bill.

A debt ceiling standoff, hot inflation reading, and hawkish Federal Reserve commentary drove Treasury yields meaningfully higher as market participants recalibrated their expectations for Fed policy changes in the near term.

Treasury yields rose sharply across the curve last week as investors digested a series of hawkish comments from Federal Reserve officials, a robust slate of economic releases, and the latest developments in Washington's debt ceiling feud.

Treasury yields rose modestly after two high-profile inflation readings suggested easing yet still firm price pressures, and Federal Reserve officials reiterated expectations for a higher-for-longer rate environment.

Treasury yields oscillated in a wide range last week, ultimately finishing lower, as market participants reacted to regional bank stress, the strong April NFP report, and the highly anticipated FOMC monetary policy meeting.

On April 21, the Alternative Reference Rates Committee (ARRC) issued an update to their scope of use and best practices for CME Term SOFR.

A $3.5B Mid-Atlantic community bank contacted Chatham for a second opinion after a broker-dealer suggested the bank hedge against falling short-term rates. After multiple conversations and customized analyses with Chatham, the bank realized rising interest rates posed a greater risk to their balance sheet.

Matt Henry, Chatham's Managing Partner and CEO, met with Rob Mangrelli, Managing Director of Hedging and Capital Markets, and together, they discussed a range of economic topics.