Market Insights February 16, 2016 Download This Week’s Market Insights Prior Week Summary The persistent and elevated volatility in the fixed income, commodity, and equity markets has continued in earnest of late, driving Treasury yields to recent lows and market sentiment seemingly lower. For reference, the closing price of the Dow Jones Industrial Average has changed by at least 100 points on all but 6 trading days so far in 2016, leaving the index lower by approximately 8% year-to-date. On an intra-day basis, the 10-year note fell to 1.52% on Thursday, the lowest level at that point of the curve since 2012. At the same time, WTI crude flirted with $26 a barrel on global growth concerns and the expanding macro-economic implications of negative sovereign yields. Fed Chair Janet Yellen set the stage for last week’s bout of volatility by…

Read More...

Market Insights February 8, 2016 Download This Week’s Market Insights Prior Week Summary The U.S. economy added 151,000 new jobs last month, well below the amount of job gains that were estimated by economists prior to the report. The lower than forecast gain followed a downward revision of 30,000 jobs from the December report, reducing the initial estimate of 292,000 jobs to 262,000. Despite the relative weakness in labor markets implied by the headline figure, economists were quick to point out improvements in the labor force participation rate, ongoing growth in wages, and continued improvement in the length of the workweek. The Household Survey showed a 615,000 increase in employment, and a 113,000 decline in unemployment, which provided a positive benefit to the labor force participation rate, which increased by 0.1% to 62.7% – the third consecutive month of gains…

Read More...

Market Insights February 1, 2016 Download This Week’s Market Insights Prior Week Summary Interest rates moved lower to end the week, capping a month that saw a nearly 40 basis point decline in the 10-year swap rate, bringing the curve to the lowest levels since mid-2013. The combination of a surprise announcement by the Bank of Japan, a weak GDP print, and a Fed statement that downgraded the inflation outlook weighed on the curve and has caused market participants to push out into the future expectations for any additional Fed tightening. As of this writing, the market appears to be pricing in only 1 hike in the 4th quarter, providing a stark contrast to the 4 quarterly hikes that were implied by the Fed’s December dot plot. Indeed, the Fed acknowledged that “inflation is expected to remain low … in…

Read More...

Market Insights January 25, 2016 Download This Week’s Market Insights Prior Week Summary It seems fitting that an unusually volatile week of trading in the markets during a holiday shortened week would be capped off by an unusually heavy winter storm in the Northeast that left much of the region blanketed by snow, with some areas getting over 2 feet. The commodities sector continues to be in the drivers seat, as a plunge and subsequent rebound of the oil price pushed stocks around in hectic trading. The price of oil has fallen to the lowest levels since 2003 amid concerns that ongoing turmoil related to China’s slowing growth rate would crimp fuel demand at the same time that the supply of the commodity has been increasing, partly due to oncoming Iranian supply among other factors. It appears as though, traders…

Read More...

Market Insights January 19, 2016 Download This Week’s Market Insights Prior Week Summary The rout in commodities and global equities continued in earnest last week as concern grows among market participants that the deceleration of growth in China will have ripple effects through all financial assets. Sentiment in markets has become incredibly negative, with some going so far as to analogize the current market, and its outlook, to the credit crisis of 2008. A prominent equity market participant, and CEO of one of the world’s largest asset management firms, went so far as to say that stocks could fall another 10% and oil another 20% before finding solid ground. China reported a major deceleration in its rate of growth last year, which has compounded concerns over a global slowdown. The growth rate slowed to 6.9% for 2015, which was the…

Read More...

Market Insights January 11, 2016 Download This Week’s Market Insights Prior Week Summary 2016 is off to a rocky start after only the first week of trading as global equity and commodity markets struggle to find footing amidst increasing global volatility. China’s Shanghai Composite Index fell 7% on 2 separate occasions last week – leaving the index nearly 15% lower from where it ended the year. Likewise, the financial press is reporting that the stock market in the U.S. began 2016 with its worst ever performance to start a year. Indeed the S&P is down 6% and the Dow Jones is off 6.2% to start the year as concerns over global growth accelerate and investor concerns about a harder landing in China increase. The trend of dollar strength is continuing, with the currency strengthening by approximately 0.5% last week compared…

Read More...

Now that Election Day is nearly a week behind us, the bunting has all been put away and the confetti swept from the streets…wait, this was a midterm election, so maybe no bunting or confetti, but at least TV ads are back to selling, not slinging, and a few yard signs have come down. For all the glamour and hype that a midterm election typically lacks, this one saw big change across the nation. But whether you experienced elation or devastation…wait, midterm year, make that modest content or mild disappointment, one fact remains: what happened on Tuesday was not without precedent. Some call it the Six-Year Itch, others the Six-Year Curse, but whatever you call it, there is a phenomenon that has been playing out over the last 100 years wherein whichever political party has held the White House for…

Read More...

Shaping Up Commodity Risk Management October 29, 2014, Treasury & Risk By Phil Weeber and Bryant Lee How to build a program that mitigates the company’s exposures to commodity price swings. Download Complete Article

Read More...

As a global financial advisory services and technology solutions firm, Chatham Financial specializes in the debt and derivatives markets. Our solutions serve the investment and risk management needs of clients across a spectrum of industries and markets. As such, we have offices in the United States, Europe, Asia and Australia. Through our blend of expert advisory services and proven technologies, we enable companies to develop effective financial strategies and successfully execute programs that optimize their business goals. Founded by Mike Bontrager in 1991, Chatham is an employee-owned, independent market leader. Our global team of capital markets experts, risk management advisors, CPAs, lawyers, quantitative analysts, and technology developers serve more than 2,500 clients annually. As a purpose-driven organization, we are committed to making a positive impact for our clients, our associates, our communities, and the capital markets at large. We are…

Read More...

Adding clarity and precision to derivative valuations Failure to properly measure the fair value of a derivative instrument can result in significant losses for a company. It can also lead to sub-optimal pricing when executing a derivative transaction. This translates into real economic losses over the life of the instrument. In addition, using outdated valuation modeling techniques or not understanding how derivative fair values are measured often lead to additional scrutiny from management, auditors, and regulators, further increasing costs to a company. Benefits of Chatham Derivative Valuation Services Independent third-party perspective: We cover all types of interest rate, foreign currency, and commodity derivatives, from caps and all types of swaps including cross-currency to FX forwards, options, and exotic derivatives. As a trusted third party that is independent and objective, Chatham offers a robust platform with proprietary methodology that provides real-time…

Read More...