What s the Cost of Waiting? How Interest Rate Swaps May Help Manage Your Interest Rate Exposure.
|
|
- Victor Nicholson
- 5 years ago
- Views:
Transcription
1 What s the Cost of Waiting? How Interest Rate Swaps May Help Manage Your Interest Rate Exposure. May Prepared by: Walt Edwards, Director, Wells Fargo Interest Rate Risk Management, Wells Fargo Securities, Associated Person. Sean T. Faeth, Private Banking Director, Wells Fargo Private Bank. In this special report 1 Where will interest rates go from here? 2 How quickly will swap rates rise? 2 Will opportunity costs become real costs? 3 The value of relationships
2 What s the Cost of Waiting? How Interest Rate Swaps May Help Manage Your Interest Rate Exposure. Interest rates have been low for a long, long time. We all know the reasons, and some of us may have become numb to the predictions of economists that interest rates will, in fact, begin rising within the next 12 to 18 months. Have borrowers been lulled into a false sense of security that they have ample time or will receive some sort of advance notice before interest rates climb from their lowest levels? The reality is that waiting to manage interest rate risk may have a real cost given the risks associated with the pace and extent of interest rate movements. The saying that no decision is a decision applies in this case, and no action may come at a price, particularly given that even a small increase in rates may be material relative to the currently low starting point. As such, if you have significant, unhedged loans or lines of credit, it may be worthwhile to have a conversation with a Private Banker and Interest Rate Risk Management Specialist to review your interest rate risk exposures. Where will interest rates go from here? The Federal Open Market Committee (FOMC) released its forecast of the Federal Funds target rate following its meeting in March As part of its statement, the FOMC indicated that all 17 participants expect the Fed Funds Rate to be at or above 3.50 percent in the longer run, and the median forecast of FOMC members is for a Fed Funds target rate of 1.00 percent by the end of 2015 (Chart 1). The Fed has also been reducing its asset purchases since January 2014 by $10 billion per month a down payment of sorts to future tapering. With the unemployment rate at 6.30 percent in April 2014 and just slightly below the Fed s target rate of 6.50 percent, the Fed is shifting towards qualitative criteria, revising Chart 1. Target Federal Funds Rate Forecast as of March 2014 Fed Funds Target Rate 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% FOMC Projection Median FOMC Member Projections Longer Run forward guidance language to state that future decisions would be based on progress towards the FOMC s goals of maximum employment and a 2.00 percent inflation rate. Given similar intimations in the past, many clients may be skeptical that the Fed is really serious this time around. Others may assume that any rate increase will be gradual, with plenty of advance notice on any short- or long-term rate increases. It is important to note, however, that swap rates have historically risen often precipitously in advance of the first Fed Funds rate hike. In fact, during the most recent monetary policy cycle, long-term rates consistently increased as the Fed hiked short-term rates from (Chart 2 on the following page). Over this cycle, the Fed held the target rate flat for 12 months before increasing it 425 bps in the following 24 months. While the market sold off too soon in some cases only to rally prior to the first increase in the Fed Funds target rate, swap rates moved consistently higher following the initial target rate hikes. Have borrowers been lulled into a false sense of security regarding low interest rates? Borrowing on a floating-rate basis and using a separate transaction, such as a swap, cap, or collar, to hedge against interest rate risk may have advantages not found with typical fixed-rate loans. Three potential benefits of an interest rate swap. 1 Interest rate stability in hedging interest rate risk associated with floating rate loans. 2 Flexible risk management including terms, portability, early loan termination or prepayment. 3 Potential for no upfront, out-of-pocket cash payments. May 2014 What s the Cost of Waiting? How Interest Rate Swaps May Help Manage Your Interest Rate Exposure 1
3 This pattern was also apparent in the two earlier Fed tightening cycles from and With Fed Funds at percent for the last five years, there is the potential for a tightening cycle of a meaningful magnitude once the Fed begins its campaign. Chart 2. Fed Monetary Policy Tightening from Rate 5.75% 5.00% 4.25% 3.50% 2.75% 2.00% 1.25% 0.50% Year Swap 3-Month LIBOR Fed Funds Target Rate How quickly will swap rates rise? Given that many economists expect that market interest rates will begin moving prior to the Fed Funds rate hikes predicted between now and the end of 2015, it is reasonable to think that rising swap rates may not be so far off. So the question for many borrowers may be not if but rather when to hedge interest rate risk exposures. In addition, recent examples of rate volatility indicate that any long-term rate increases could be fast moving. For example, less than one year ago, following 2006 a string of positive economic reports and former Fed Chairman Ben Bernanke s statements to Congress that the Fed s tapering of asset purchases could begin in a matter of months, the 10-year swap rates rose in a meaningful way (Chart 3). Although swap rates pulled back somewhat in late 2013, there are no guarantees of future pullbacks once swap rates start rising. Chart Year Swap Rate (January 2013 January 2014) Swap Rate 3.3% 3.1% 2.9% 2.7% 2.5% 2.3% 2.1% 1.9% 1.7% 89 Basis Points increase since May % 01/13 03/13 05/13 07/13 09/13 11/13 01/14 Will opportunity costs become real costs? Quantifying potential sensitivity to changes in interest rates always depends on a borrower s financial situation. As an example, consider interest rate sensitivity for a $5 million loan with a five/25 year tenor and $5 million notional swap (Table 1). The analysis below is based on a comparison of one-month LIBOR to fixing LIBOR at recent mid-market swap rates. In this example, the Table 1. Hypothetical $5 Million Loan with a 5/25 Year Tenor and $5 Million Notional Swap $5 million loan with a 5/25 year tenor and $5 million notional swap One-month LIBOR (London Interbank Offered Rate) vs. Swap Rates as of April 15, 2014 Average Annual 1ML (1SD) Fixed Swap Rate Annual Interest Savings (Expense) in % Annual Interest Savings (Expense) in $ Cumulative Interest Savings (Expense) in $ 0.24% 2.56% 2.32% $116,000 $116,000 Year % 2.56% 1.74% $85,206 $201,206 Year % 2.56% 0.53% $25,379 $226,585 Year % 2.56% (0.65)% ($30,385) $196,200 Year % 2.56% (1.57)% ($71,511) $124,689 Year % 2.56% (2.20)% ($97,438) $27,251 Year % 2.56% (2.56)% ($109,995) ($82,744) Year % 2.56% (2.83)% ($117,660) ($200,405) Year % 2.56% (2.97)% ($119,139) ($319,544) Year % 2.56% (3.09)% ($119,204) ($438,748) Year 10 Source: Wells Fargo Interest Rate Risk Management, 04/14 2 May 2014 What s the Cost of Waiting? How Interest Rate Swaps May Help Manage Your Interest Rate Exposure
4 opportunity cost of waiting to hedge interest rate exposure could become quite significant over $100,000 per year depending on market interest rate movements. The value of relationships. Developing a hedging strategy in advance of potentially rising interest rates may be prudent, particularly as the current interest rate cycle appears to be waning. Any considerations start with conversations that focus on your individual needs and circumstances. The Private Bank team will first seek to understand your current situation and objectives, and then work with you to explore alternatives that may help manage interest rate risk and potentially lower borrowing costs depending on marketplace conditions. Five questions to consider regarding interest rate exposure: 1 How much long-term credit do you have and what portion is fixed vs. floating? 2 How was the interest rate structure determined on this credit? 3 Do you have concerns about the interest rate structure on your loans? 4 Do you have loans that need to be refinanced in the next 12 months? 5 What would be the impact on your wealth plan if interest rates rose one percent or more? May 2014 What s the Cost of Waiting? How Interest Rate Swaps May Help Manage Your Interest Rate Exposure 3
5 Disclosures. Wells Fargo Private Bank provides products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries. All loans are subject to credit approval. Securities-backed lending has special risks and is not suitable for everyone. If the market value of your pledged securities declines below required levels, you may be required to pay down your line of credit or pledge additional eligible securities in order to maintain it, or the lender may require the sale of some or all of your pledged securities. The sale of pledged securities may cause you to suffer adverse tax consequences. You should discuss the tax implications of pledging securities as collateral with your tax advisor. All securities and accounts are subject to eligibility requirements. Please read all lines of credit documents carefully. The proceeds from an asset backed line of credit may not be used to purchase additional securities or pay down margin. Wells Fargo & Company and its affiliates do not provide legal advice. Please consult your legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depend on the specific facts of your own situation at the time your taxes are prepared. The strategies discussed in this report may be unsuitable for some clients depending on their specific objectives and financial position. Hypothetical examples do not represent actual performance results achieved and are for illustrative purposes only. Dodd-Frank regulations require that any swap marketing activities be conducted solely by Associated Persons (or APs ), which will limit the role that RMs, credit officers, investment bankers and other non-associated Persons can play in the swap marketing process. Non-APs are strictly prohibited from recommending or presenting specific swap or FX structures or transactions to clients. Only APs can engage in these activities. If you have a question as to whether or not you are an Associated Person, contact WFS compliance (g=dfcomplianceteam@wellsfargo.com) or International compliance (fxcompliance@wellsfargo.com). This is a solicitation for entering into derivatives transactions regulated by the Commodity Futures Trading Commission ( CFTC ) for the purposes of, and to the extent it is subject to, CFTC Regulations 1.71 and promulgated pursuant to the U.S. Commodity Exchange Act ( CEA ), and is not a research report as defined in CFTC Regulations 1.71 and This communication should not be construed as a recommendation or opinion with respect to any derivative or trading strategy involving a derivative for purposes of CFTC Regulations Part 23 or the CEA. This solicitation does not take into account the particular investment objectives, financial conditions, or needs of individual clients and is not intended to serve as a basis for entering into a derivatives transaction or to suggest, through opinion, recommendation, or otherwise, that the counterparty should enter into a particular derivative transaction or trading strategy involving a derivative. Parties should consult their own advisors for opinions on whether to enter into any derivative transaction or trading strategy involving a derivative Wells Fargo Bank, N.A. All rights reserved. Member FDIC. NMLSR ID TPB01593 ( /14)
Recourse vs. Nonrecourse: Commercial Real Estate Financing Which One Is Right for You?
The following information and opinions are provided courtesy of Wells Fargo Bank, N.A. Recourse vs. Nonrecourse: Commercial Real Estate Financing Which One Is Right for You? 1 2 2 3 3 4 Commercial real
More informationFinancial Markets & Debt Portfolio Update May 25, 2016 Introduction Public Financial Management Inc., (PFM), financial advisor to the Contra Costa Tra
Financial Markets & Debt Portfolio Update May 25, 2016 Introduction Public Financial Management Inc., (PFM), financial advisor to the Contra Costa Transportation Authority (CCTA) has prepared the following
More informationInformation Statement & Disclosure for Material Risks
Information Statement & Disclosure for Material Risks Material Risks CFTC Rule 23.431(a)(1) requires Wells Fargo Bank, N.A. ( WFBNA, we, us or our ) to disclose to you the material risks of a swap before
More informationFinancial Markets & Debt Portfolio Update August 23, 2016 Introduction Public Financial Management Inc., (PFM), financial advisor to the Contra Costa
Administration and Projects Committee STAFF REPORT Meeting Date: September 1, 2016 Subject Summary of Issues Recommendations Financial Implications Options Attachments Accept Quarterly Financial Markets
More informationAG LENDING IN A CHANGING MARKET: RISING INTEREST RATES, SHIFTING POLICY, AND STRATEGIES TO COMPETE
AG LENDING IN A CHANGING MARKET: RISING INTEREST RATES, SHIFTING POLICY, AND STRATEGIES TO COMPETE ERIC DONOVAN MANAGING DIRECTOR, INTL FCSTONE MARKETS, LLC Disclaimer The trading of derivatives such as
More informationAttachment A Financial Markets & Debt Portfolio Update October 21, 2016 Introduction Public Financial Management Inc. (PFM), financial advisor to the
Attachment A Financial Markets & Debt Portfolio Update October 21, 2016 Introduction Public Financial Management Inc. (PFM), financial advisor to the Contra Costa Transportation Authority (CCTA) has prepared
More informationExemptions from CFTC Registration. 27 June 2016
Exemptions from CFTC Registration 27 June 2016 Are we in or out of the Commodity Exchange Act? The Dodd-Frank Act amended the definition of "commodity pool" to include any type of pooled investment vehicle
More informationLiquidity is Relevant Again
Liquidity is Relevant Again April 2019 Not FDIC Insured May Lose Value No Bank Guarantee Not NCUA or NCUSIF insured. May lose value. No credit union guarantee. For institutional use only. l 2019 FMR LLC.
More informationA Secured PrimeLine line of credit. Access cash today and stay invested for tomorrow
A Secured PrimeLine line of credit Access cash today and stay invested for tomorrow A flexible financing alternative A Secured PrimeLine line of credit may provide opportunities for you to enhance both
More informationAfter the Rate Increase, What Then?
After the Rate Increase, What Then? Robert Eisenbeis, Ph.D. Vice Chairman & Chief Monetary Economist Bob.Eisenbeis@Cumber.com What the FOMC Did At Dec Meeting The Fed made the first step towards normalization
More informationRI GFOA. May 17, Michael Morin, CFA SVP, Head of Liquidity Management Solutions. Jim Scalisi Vice President Relationship Manager
RI GFOA May 17, 2018 Michael Morin, CFA SVP, Head of Liquidity Management Solutions Jim Scalisi Vice President Relationship Manager Not FDIC Insured May Lose Value No Bank Guarantee Not NCUA or NCUSIF
More informationBloomberg Survey of Economists
November 2017 Economists Expect Hurricanes to Weigh Down 3Q Data with 4Q Rebound The November Bloomberg Survey of Economists shows few changes to the economic outlook, no changes to the Fed Funds projections,
More informationUpdated: December 2018
Commonwealth Bank of Australia Updated: December 2018 1 Commonwealth Bank of Australia This updated document supersedes the previously published Ex-Ante disclosure dated June 2018. Amendments to the FX
More informationFurther Along the Tightening Path
Robert Kavcic, Senior Economist June 15, 2018 Further Along the Tightening Path Equity markets were mixed this week alongside a solid run of U.S. economic data, a widely-expected Federal Reserve rate hike
More informationPlanning in a New Interest Rate Environment
The following information and opinions are provided courtesy of Wells Fargo Bank N.A. Wealth Planning Update Planning in a New Interest Rate Environment FEBRUARY 2016 Matthew Brady Senior Director of Planning,
More informationGain access to the funds you need
Maintain your investment strategy with securities-based borrowing Gain access to the funds you need As a ready source of funds for a wide range of uses, a securities-based loan or line of credit offers
More informationPA TURNPIKE COMMISSION POLICY
POLICY SUBJECT: PA TURNPIKE COMMISSION POLICY This is a statement of official Pennsylvania Turnpike Policy RESPONSIBLE DEPARTMENT: NUMBER: 7.07 APPROVAL DATE: 05-07-2013 EFFECTIVE DATE: 05-07-2013 7.07
More informationA Practical Guide to Lender Compliance with Eligible Contract Participant (ECP) Requirements
A Practical Guide to Lender Compliance with Eligible Contract Participant (ECP) Requirements Introduction Pursuant to the Commodity Exchange Act (the CEA ), as modified by Title VII of the Dodd-Frank Act
More informationJanuary 25, 2017 Financial Markets & Debt Portfolio Update Contra Costa Transportation Authority Introduction Public Financial Management Inc. (PFM),
January 25, 2017 Introduction Public Financial Management Inc. (PFM), financial advisor to the (CCTA) has prepared the following report as an update of market conditions through December 30, 2016. The
More informationUpdated June Commonwealth Bank of Australia
Commonwealth Bank of Australia Updated June 2018 1 Commonwealth Bank of Australia 1. Introduction This document sets out information concerning costs and charges that we are required to disclose to you
More informationComplement your overall financial strategy with customized lending
Complement your overall financial strategy with customized lending Merrill Lynch Wealth Management makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated, a
More informationInterest Rate Risk Management Refresher. April 29, Presented to: Howard Sakin Section I. Basics of Interest Rate Hedging?
Interest Rate Risk Management Refresher April 29, 2011 Presented to: Howard Sakin 410-237-5315 Section I Basics of Interest Rate Hedging? 1 What Is An Interest Rate Hedge? Interest rate hedges are contracts
More informationPENNSYLVANIA TURNPIKE COMMISSION POLICY AND PROCEDURE
PTC 502005539 (12/05) Policy Subject: 7.7 - Interest Rate Swap Management Policy PENNSYLVANIA TURNPIKE COMMISSION POLICY AND PROCEDURE This is a statement of official Pennsylvania Turnpike Commission Policy
More informationVirginia GFOA. May 4, Reid Andrews Government Treasury Management. Vanessa Hubbard Fixed Income Market & Portfolio Strategy
Virginia GFOA May 4, 2016 Reid Andrews Government Treasury Management Vanessa Hubbard Fixed Income Market & Portfolio Strategy WFS and its investment representatives do not act as Municipal Advisors and
More informationMan AHL Diversified plc
NAV per unit USD 88.19 Total NAV USD 988,635,806 No. units 11,209,426 Against a backdrop of the beginning of the end to QE, December proved to be a slightly volatile month for the fund, with gains in stocks,
More informationManaging Interest Rate Exposure
Managing Interest Rate Exposure Global Markets Contents Products to manage Interest Rate Exposure...1 Interest Rate Swap Product Overview...2 Interest Rate Cap Product Overview...8 Interest Rate Collar
More informationInvesting in Municipal Bonds in a Rising Rate Environment
Investing in Municipal Bonds in a Rising Rate Environment February, 2015 The value of patience and active management to bond fund investors After 32 years of generally downward trending interest rates,
More informationMonetary Policy as the Economy Approaches the Fed s Dual Mandate
EMBARGOED UNTIL Wednesday, February 15, 2017 at 1:10 P.M., U.S. Eastern Time OR UPON DELIVERY Monetary Policy as the Economy Approaches the Fed s Dual Mandate Eric S. Rosengren President & Chief Executive
More informationInvestment Research. Deposit Betas Rising but Still Falling Short. Strategy. June 11, 2018
Strategy June 11, 2018 Contacts Lance Pan, CFA Director of Investment Research and Strategy Main: 617.630.8100 Research: 617.244.9466 lpan@capitaladvisors.com Abstract Deposit rates are starting to increase
More informationEx-ante cost and charges disclosure 1
Ex-ante cost and charges disclosure 1 Introduction An important element which needs to be taken into consideration when trading with Rabobank, is the cost of our services and the cost related to the financial
More informationMARCH 2014 KEY RECENT DEVELOPMENTS. 1. Overview of FX Swap Regulatory Framework
Wsgr alert MARCH 2014 Fourth update: dodd-frank rules Impact end-users of ForeIgn exchange derivatives KEY RECENT DEVELOPMENTS This March 2014 update is a summary of certain recent developments under the
More informationNCLGIAWC Optimizing Investment Portfolios
NCLGIAWC Optimizing Investment Portfolios Wells Fargo Securities - Fixed Income Market & Portfolio Strategy February 2017 Garret Sloan, CFA Director WFS and its investment representatives do not act as
More information2015 BOK Financial Corporation and BOKF, NA DFAST Public Disclosure
2015 BOK Financial Corporation and BOKF, NA DFAST Public Disclosure BOK Financial Corporation and BOKF, NA are required to perform annual company-run capital stress testing pursuant to the Dodd-Frank Wall
More informationA Compelling Case for Leveraged Loans
A Compelling Case for Leveraged Loans EXECUTIVE SUMMARY In the current market environment, there are a number of compelling reasons to invest in leveraged loans. In a situation where most assets are trading
More informationUS Q3 GDP acceleration due to inventory build but final domestic demand remains weak
ISSN: 1791 35 35 November 26, 2013 Olga Kosma Economic Analyst okosma@eurobank.gr US Q3 GDP acceleration due to inventory build but final domestic demand remains weak Real GDP accelerated to 2.8% q-o-q
More informationLoan Pricing Structure and the Nature of Interest Rates
Loan Pricing Structure and the Nature of Interest Rates S. Blake Scharlach Senior Vice President / Director of Capital Markets Sales TIB- The Independent BankersBank, N.A. S. Blake Scharlach Blake joined
More informationInterest Rate Risk Management Refresher. April 27, Presented to: Section I. Basics of Interest Rate Hedging?
Interest Rate Risk Management Refresher April 27, 2012 Presented to: Section I Basics of Interest Rate Hedging? What Is An Interest Rate Hedge? Interest rate hedges are contracts between parties designed
More informationTrends in the interest rate environment and new Accounting Standards Update for ASC 815 (ASU )
Trends in the interest rate environment and new Accounting Standards Update for ASC 815 (ASU 2017 12) Tim Potter, CPA Hedge Accounting Manager Craig Haymaker, CPA Chief Operating Officer Agenda Introductions
More informationJanuary 3, Re: Comments Regarding CFTC s Proposed Rule Pertaining to the Process for Review of Swaps for Mandatory Clearing
Mr. David A. Stawick Secretary Commodity Futures Trading Commission Three Lafayette Centre 1155 21st Street, NW Washington, DC 20581 Submitted via Agency Website January 3, 2011 Re: Comments Regarding
More informationU. S. Economic Projections. GDP Core PCE Price Index Unemployment Rate (YE)
The Federal Reserve will likely hold short-term interest rates steady until late 2015. U. S. Economic Projections 2014 2015 2014 2015 2014 2015 Stifel FI Strategy Group Forecast 2.5% 3.1% 1.4% 1.7% 6.4%
More informationRisk Insight. The Central Bank Tightening Party: Who Will Be Next To Join? What are the chances... Volume 8, Issue th July 2017.
Inside this issue Big Picture... 1-2 GBPUSD... 3 GBPEUR... 4 Risk Insight Volume 8, Issue 31 24 th July 2017 EURUSD... 5 USDCAD... 6 Economic Data and Market Indicators... 7 Appendix... 8 The Central Bank
More informationProvided to you by Lee McLain
Provided to you by Lee McLain Lee McLain First Federal Bank of Kansas City 816.728.7700 lee.mclain@ffbkc.com NMLS:680316 Contents Weekly Review: week of November 26, 2018 Economic Calendar - week of December
More informationDERIVATIVES PROCEDURES AND THE NCUA APPLICATION
DERIVATIVES PROCEDURES AND THE NCUA APPLICATION CUNA CFO Conference May 19, 2015 Presented by: Emily Moré Hollis, CFA Founding Partner Agenda Application Checklist Back office Derivative budget Timeline
More informationYour story is unique. Your Financial Advisor can work with Wells Fargo Private Bank to build a team designed around you
Your story is unique Your Financial Advisor can work with Wells Fargo Private Bank to build a team designed around you Investment and Insurance Products: NOT FDIC Insured u NO Bank Guarantee u MAY Lose
More informationAsset Allocation Monthly
For professional investors Asset Allocation Monthly December 2015 Joost van Leenders, CFA, Chief economist, Multi Asset Solutions joost.vanleenders@bnpparibas.com +31 20 527 5126 SUMMARY INVESTMENT CLIMATE
More informationFed Delivers Another December Rate Hike
Fed Delivers Another December Rate Hike December 14, 2017 by Chris Molumphy of Franklin Templeton Investments The US Federal Reserve delivered another interest-rate hike at its December monetary policy
More informationFixed Income Update: June 2017
Fixed Income Update: June 2017 James Kochan Chief Fixed-Income Strategist Overview Political turmoil may obscure but does not usually overwhelm the economic fundamentals that drive the bond markets.. Those
More informationUNDERSTANDING AND MANAGING OPTION RISK
UNDERSTANDING AND MANAGING OPTION RISK Daniel J. Dwyer Managing Principal Dwyer Capital Strategies L.L.C. Bloomington, MN dan@dwyercap.com 952-681-7920 August 9 & 10, 2018 Dwyer Capital Strategies L.L.C.
More informationOne of the underpinnings of the gain in risk assets since last fall has been the firming signs of synchronized global growth.
The Aerial View Fixed Income & Markets Update Looking at the Economic Tea Leaves Global GDP estimates remain positive, although other data has been more mixed recently Overall strong US data needs confirmation
More informationMerrill Lynch Government Securities Inc. and Subsidiary
Merrill Lynch Government Securities Inc. and Subsidiary Consolidated Balance Sheet as of June 27, 2008 (unaudited) S.E.C. I.D. No. 8-38051 Merrill Lynch Government Securities Inc. and Subsidiary CONSOLIDATED
More informationThe Economy, Inflation, and Monetary Policy
The views expressed today are my own and not necessarily those of the Federal Reserve System or the FOMC. Good afternoon, I m pleased to be here today. I am also delighted to be in Philadelphia. While
More informationMORTGAGE FINANCE. 49 Shades of Grey. Compliance/ Regulation. What the Increase in State-Level Enforcement Means for CA Lenders IN FOCUS:
LIBOR REPLACED BY SOFR So Far, So Good? SEE PAGE 19 MORTGAGE FINANCE Winter 2018 NEWS 49 Shades of Grey What the Increase in State-Level Enforcement Means for CA Lenders SEE PAGE 12 IN FOCUS: Compliance/
More informationNCUA LETTER TO CREDIT UNIONS
NCUA LETTER TO CREDIT UNIONS NATIONAL CREDIT UNION ADMINISTRATION 1775 Duke Street, Alexandria, VA 22314 DATE: September 2003 LETTER NO: 03-CU-15 TO: SUBJ: Federally Insured Credit Unions Real Estate Concentrations
More informationDebt Management. Policy Statement and Purpose
Debt Management Policy Type: Board of Visitors Responsible Office: Vice President for Finance and Administration, Associate Vice President for Finance and Administration and Treasury Services Initial Policy
More informationTrending Topics from J.P. Morgan Corp Fin Advisory Week of April 30, 2018
Trending Topics from J.P. Morgan Corp Fin Advisory Week of April 30, 2018 Every two weeks, we write on four themes or trends to serve as a source of thoughtleadership for management teams. Areas we cover
More informationINTEREST RATE SWAP POLICY
INTEREST RATE SWAP POLICY August 2007 Table of Contents I. Introduction... 1 II. Scope and Authority... 1 III. Conditions for the Use of Interest Rate Swaps... 1 A. General Usage... 1 B. Maximum Notional
More informationAppendix 1: Materials used by Mr. Kos
Presentation Materials (PDF) Pages 192 to 203 of the Transcript Appendix 1: Materials used by Mr. Kos Page 1 Top panel Title: Current U.S. 3-Month Deposit Rates and Rates Implied by Traded Forward Rate
More informationUS Fed: December rate hike still on the cards
Policy Watch: US Fed Treasury Research Group For private circulation only US Fed: December rate hike still on the cards In line with our expectations, US Fed maintained status quo and kept the Fed funds
More informationMarch 26, Why Hedge? How to Hedge? Trends and Strategies in Interest Rate and FX Risk Management
Establishing and Maintaining an FX and Interest Rate Hedging Program: The Lifecycle of a Hedge presented by Thomas Armes, Managing Director Foreign Exchange, PNC Capital Markets Steve Goel, Assistant Treasurer,
More informationCash Management Portfolios
September 30, 2018 Portfolio Manager Commentary Cash Management Portfolios Chief Investment Officer Jim Palmer What market conditions had a direct impact on the bond market this quarter? Positive economic
More informationGaining trust newsletter
Gaining trust newsletter Spring 2017 Global economic outlook The International Monetary Fund is projecting global economic growth to be 3.4% and 3.6% in 2017 and 2018, respectively. Emerging market economies
More informationCourse Materials UNDERSTANDING AND MANAGING OPTION RISK
Course Materials UNDERSTANDING AND MANAGING OPTION RISK Dan Dwyer Managing Director Bloomington, Minnesota danieldwyer@firstintegritycapital.com 952-681-7920 August 10 & 11, 2017 Understanding and Managing
More informationMonetary Policy and Interest Rate Reform
Thomas Shik Senior Economist thomasshik@hangseng.com Monetary Policy and Interest Rate Reform The benchmark lending rate set by the People s Bank of China (PBOC) has remained the key reference for banks
More informationInterest Rate Forwards and Swaps
Interest Rate Forwards and Swaps 1 Outline PART ONE Chapter 1: interest rate forward contracts and their pricing and mechanics 2 Outline PART TWO Chapter 2: basic and customized swaps and their pricing
More informationNEW JERSEY EDUCATIONAL FACILITIES AUTHORITY SWAP AND DERIVATIVE POLICY. Adopted: October 26, 2005
NEW JERSEY EDUCATIONAL FACILITIES AUTHORITY SWAP AND DERIVATIVE POLICY Adopted: October 26, 2005 A. GENERAL NEW JERSEY EDUCATIONAL FACILITIES AUTHORITY SWAP AND DERIVATIVE POLICY 1) Scope and Purpose 2)
More informationChart Pattern Secrets
Chart Pattern Secrets October 04, 2018 Next Alert: 10/09/18 The Trading System: Application of Trading Chart Patterns with Futures and Option Contracts Copyright 1997 All rights reserved. 1 2 3 9/20/18:
More informationGlossary for Retail FX
Glossary for Retail FX This glossary has been compiled by CME from a number of sources. The definitions are not intended to state or suggest the correct legal significance of any word or phrase. The sole
More informationInvesting Liquidity in a Total Rate of Return World
Investing Liquidity in a Total Rate of Return World April 2016 Not FDIC insured. May lose value. No bank guarantee. Not NCUA or NCUSIF insured. May lose value. No credit union guarantee. Agenda 1. Regulatory
More informationFunctional Training & Basel II Reporting and Methodology Review: Derivatives
Functional Training & Basel II Reporting and Methodology Review: Copyright 2010 ebis. All rights reserved. Page i Table of Contents 1 EXPOSURE DEFINITIONS...2 1.1 DERIVATIVES...2 1.1.1 Introduction...2
More informationEarly Observations on Gradual Monetary Policy Normalization
EMBARGOED UNTIL WEDNESDAY, JANUARY 13, 2016 AT 8:20 A.M. EASTERN TIME OR UPON DELIVERY Early Observations on Gradual Monetary Policy Normalization Eric S. Rosengren President & CEO Federal Reserve Bank
More informationProposed Margin Requirements for Uncleared Swaps Under Dodd-Frank
Proposed Margin Requirements for Uncleared Swaps Under Dodd-Frank Federal Reserve Board, OCC, FDIC, Farm Credit Administration and Federal Housing Finance Agency Repropose Rules for Minimum Margin and
More informationSchool District of Palm Beach County - Swap Update
Photo Here School District of Palm Beach County - Swap Update May 20, 2005 presented by Public Financial Management Citigroup & UBS Financial Services Public Financial Management, Inc. PFM Asset Management
More informationClient Update CFTC Issues Preliminary Report on Swap Dealer De Minimis Exception
1 Client Update CFTC Issues Preliminary Report on Swap Dealer De Minimis Exception NEW YORK Byungkwon Lim blim@debevoise.com Aaron J. Levy ajlevy@debevoise.com On November 18, 2015, the Division of Swap
More informationPension Funds on a Roller Coaster Ride
Topical Commentary Pension Funds on a Roller Coaster Ride January 2014 Pension funds may have had their best year ever in 2013, improving $303 billion in aggregate among S&P 500 companies. This follows
More informationManaging Risk off the Balance Sheet with Derivative Securities
Managing Risk off the Balance Sheet Managing Risk off the Balance Sheet with Derivative Securities Managers are increasingly turning to off-balance-sheet (OBS) instruments such as forwards, futures, options,
More informationSecurities-Based Lending
ab Securities-Based Lending We realize that the strategic use of credit may be an important component of your overall wealth management plan. If you have a portfolio that may be used as collateral for
More informationSoft Currency Economics 20th Anniversary Presentation July 18, The Final Analysis
Soft Currency Economics 20th Anniversary Presentation July 18, 2013 The Final Analysis 1971 to 1997 Italy 1993 Columbia debate Brief History Fundamentals The dollar is a simple public monopoly There can't
More informationInvesco Fixed Income Investment Insights What may LIBOR s phase-out mean for investors?
Invesco Fixed Income Investment Insights What may LIBOR s phase-out mean for investors? October 2018 Key takeaways With the phasing out of the London interbank offered rate (LIBOR), a new, more transparent
More informationSimplified accounting for private companies: Certain interest rate swaps
Simplified accounting for private companies: Certain interest rate swaps Prepared by: Faye Miller, Partner, National Professional Standards Group, RSM US LLP faye.miller@rsmus.com, +1 410 246 9194 Paige
More informationWHY IS THIS HIKING CYCLE DIFFERENT FROM ALL OTHER HIKING CYCLES?
06 April 2017 By David Ader, Chief Macro Strategist for Informa Financial Intelligence Ader s musings. Let me start with the reality that the FOMC minutes for the March meeting didn t do much to stir the
More informationDerivative Management Policy
Derivative Management Policy Updated August 31, 2017 CONTENTS I. INTRODUCTION... 3 II. POLICY OBJECTIVES AND PHILOSOPHY... 3 III. MANAGEMENT AND OVERSIGHT... 3 RESPONSIBILITIES... 4 IV. GUIDELINES... 4
More informationNEW YORK STATE HOUSING FINANCE AGENCY. GUIDELINES FOR INTEREST RATE EXCHANGE AGREEMENTS, adopted September 12, 2013
NEW YORK STATE HOUSING FINANCE AGENCY GUIDELINES FOR INTEREST RATE EXCHANGE AGREEMENTS, adopted September 12, 2013 Authorization Subject to the provisions of Article 5-D of the State Finance Law ( Article
More informationWEEKLY GUIDANCE ON ECONOMIC AND GEOPOLITICAL EVENTS December 18, 2018 Are Rising Household Debt Concerns Warranted?
Craig P. Holke Investment Strategy Analyst WEEKLY GUIDANCE ON ECONOMIC AND GEOPOLITICAL EVENTS December 18, 2018 Are Rising Household Debt Concerns Warranted? Key takeaways» Concerns have risen about the
More informationSusquehanna Group Advisors, Inc.
Susquehanna Group Advisors, Inc. A Pennsylvania Municipal Advisory and Consulting Firm Presentation to Lower Paxton Township August 14, 2018 INTEREST RATE OUTLOOK 2 Interest Rate History Last 25 Years
More informationInterest Rate Environment and FHLB Advance Strategies
Interest Rate Environment and FHLB Advance Strategies Jason Hwang VP / Director, Planning and Research Kevin Martin VP / Member Financial Strategies February 10, 2016 This webinar is being recorded Disclaimer
More informationFidelity Investments: Cash Segmentation & An Active Approach to Liquidity Management
Fidelity Investments: Cash Segmentation & An Active Approach to Liquidity Management December 2017 Not FDIC Insured May Lose Value No Bank Guarantee Not NCUA or NCUSIF insured. May lose value. No credit
More informationof RBC Dominion Securities Your Money, Well Managed October, 2013 Professional Wealth Management Since 1901
of RBC Dominion Securities Your Money, Well Managed October, 2013 Global Economic Overview....Steady as we go. European Comeback US Federal Reserve Tapering Talk US Government Shutdown Market Recap..........The
More informationFixed income market update
March 2, 215 Fixed income market update Taplin, Canida & Habacht, LLC BMO Global Asset Management 11 Brickell Bay Drive Suite 21 Miami, Florida 33131 p 35-379-21 f 35-379-4452 tchinc.com Fixed income market
More informationWritten Testimony of Eric S. Rosengren President & Chief Executive Officer Federal Reserve Bank of Boston
Written Testimony of Eric S. Rosengren President & Chief Executive Officer Federal Reserve Bank of Boston Field hearing of the Committee on Financial Services of the U.S. House of Representatives: Seeking
More informationand 10 year spread compressed further by an additional 34 basis points. The following table shows the yield curve at the end of the fourth quarter.
4th Third quarter real GDP grew at a 3.2% annualized rate, thereby falling in line with VAAM s forecast and above the consensus outlook. This represented the strongest quarterly growth rate since the first
More informationProtecting Balance Sheets in a Rising Interest Rate Environment
Michigan Credit Union League & Affiliates Annual Convention and Exposition Helping Credit Unions Serve, Grow and Remain Strong #mculace Protecting Balance Sheets in a Rising Interest Rate Environment June
More informationMORGAN STANLEY SMITH BARNEY LLC CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AS OF JUNE 30, 2017 (UNAUDITED)
MORGAN STANLEY SMITH BARNEY LLC CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AS OF JUNE 30, 2017 (UNAUDITED) ******** MORGAN STANLEY SMITH BARNEY LLC CONSOLIDATED STATEMENT OF FINANCIAL CONDITION June
More informationGrowth May Slow to End 2016 But Sentiment Brightens
Economic Developments December 2016 Growth May Slow to End 2016 But Sentiment Brightens We expect economic growth to moderate to less than two percent this quarter, with full-year 2016 growth at 1.8 percent.
More informationCore Plus Fixed Income Portfolio
MORGAN STANLEY INSTITUTIONAL FUND TRUST Core Plus Fixed Income Portfolio FIXED INCOME GLOBAL FIXED INCOME TEAM COMMENTARY SEPTEMBER 30, 2017 Market Review and Outlook The biggest macroeconomic event for
More informationINTEREST RATE SWAP POLICY
INTEREST RATE SWAP POLICY I. INTRODUCTION The purpose of this Interest Rate Swap Policy (Policy) of the Riverside County Transportation Commission (RCTC) is to establish guidelines for the use and management
More informationCurrent Overview of the Global Economy
Current Overview of the Global Economy Anthony Chan Managing Director & Chief Economist J.P. Morgan Private Banking AL CONFIDENTIA Investment products: Not FDIC insured No bank guarantee May lose value
More informationCommentary March 2013
Market Price of Bond Market Price of Bond Commentary March 2013 Interest Rates: Creeping Higher Interest rates and bond yields are at multi-generational lows and are expected to trend higher over the next
More informationBOND MODEL COMMENTARY FOR APRIL 9, 2007
BOND MODEL COMMENTARY FOR APRIL 9, 2007 Charts and technical commentary by David Chapman Union Securities Ltd, 33 Yonge Street, Suite 901, Toronto, Ontario, M5E 1G4 fax (416) 604-0533, (416) 604-0557,
More informationEuropean Investment Bulletin
European Investment Bulletin Spring 2009 Prime yield decompression per sector (yoy) Rents in decline in line with business sentiment 200 CBD offices Warehouses Shopping Centres European average prime office
More informationAgenda Report. October 22, Honorable Mayor and City Council Pasadena Public Financing Authority. THROUGH: Finance Committee
Agenda Report TO: Honorable Mayor and City Council Pasadena Public Financing Authority THROUGH: Finance Committee FROM: Director of Finance PPFA Treasurer SUBJECT: JOINT ACTION: TAX EQUITY AND FISCAL RESPONSIBILITY
More information