Why it’s not too late for interest rate swaps
Bob Newman writes for Bank Director and explains why derivatives remain an essential tool for banks to manage net interest margin even after the Federal Reserve’s sharp and rapid rate increases in 2022.
Contact us today
Send us a message today if you are interested in learning more about interest rate hedging.
Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit chathamfinancial.com/legal-notices.
Transactions in over-the-counter derivatives (or “swaps”) have significant risks, including, but not limited to, substantial risk of loss. You should consult your own business, legal, tax and accounting advisers with respect to proposed swap transaction and you should refrain from entering into any swap transaction unless you have fully understood the terms and risks of the transaction, including the extent of your potential risk of loss. This material has been prepared by a sales or trading employee or agent of Chatham Hedging Advisors and could be deemed a solicitation for entering into a derivatives transaction. This material is not a research report prepared by Chatham Hedging Advisors. If you are not an experienced user of the derivatives markets, capable of making independent trading decisions, then you should not rely solely on this communication in making trading decisions. All rights reserved.23-0022
Our featured insights
ECB hikes 25 bps while BoE keeps rates steady
The Bank of England (BoE) announced it would keep rates on hold at today's meeting, following 14 consecutive rate hikes that have taken borrowing costs to 5.25%, the highest level since 2007. A 25-basis-point rate hike was expected at the start of the week, but the release of August inflation...
Strong economic data, persistent inflation sends yields higher
Treasury yields rose moderately across the curve last week as investors digested the latest inflation readings and awaited the rapidly approaching September FOMC monetary policy meeting.
Rates rise as Fed officials preach patience
In a holiday-shortened week, Treasury yields climbed higher across the curve as investors digested better-than-expected service economy data and Fed officials preached patience during the latest stage of the monetary policy cycle.
Rates drop amid weak economic data
Treasury yields dropped last week as investors reacted to a series of weak economic reports and relatively dovish Fed speak.
Short-end rises following Powell’s Jackson Hole speech
Treasury yields increased, and the two-year Treasury yield topped 5.00% by the week's end after Fed Chair Jerome Powell delivered a hawkish speech at the annual Jackson Hole Economic Policy Symposium.
BoE hikes 25 bps and warns more to come, while ECB cools on a September hike
The Bank of England (BoE) raised borrowing costs by 25 basis points at their meeting today, a smaller hike than their June meeting following better-than-expected data. However, two policymakers voted for a 50-basis-point increase. The BoE's statement warned that some of the upside inflation risks...
FOMC increases rates by 25 bps to 525–550 bps range, reflecting 22-year high
On Wednesday, July 26, 2023, the Federal Open Market Committee (FOMC) voted unanimously to raise the fed funds rate to a target range of 5.25%–5.50%. Following a pause in rate hikes at the prior meeting, this increase elevates the fed funds target to its highest level since 2001 and was...
ECB holds course but BoE in trouble
The European Central Bank (ECB) continued its path of rate rises at the latest meeting, surprising no one with a hike of 25 basis points taking its deposit rate to 3.50%, the highest level in 22 years. The Governing Council is making every effort to reduce inflation to their 2.00% target after...