Along with the heightened sensitivity about the health of the banking sector, business media have reflected a heretofore under-appreciated recognition of the importance of interest rate risk management in banking. Recent reporting and editorializing leaves the impression, however, that we wouldn’t be facing this onslaught of failures and rescues if only these troubled institutions had managed their risks better. There’s a certain truth to that, but it’s not quite that simple.
Like all commercial enterprises, banks operate in a world of uncertainty; but for banks, the realm of interest rate uncertainty is paramount. Banks function both as borrowers and lenders at the same time. They borrow largely from their depositors, to whom they pay interest; and they lend to individuals and companies by initiating and buying loans or other securities, thereby earning interest. Thus, they bear interest rate sensitivity on both their assets and their liabilities.
Derivatives Litigation Services assists legal teams with litigation when derivative contracts play a role in disputed transactions. The firm offers advice and counsel on a best efforts basis but bears no responsibility for outcomes dictated by mediation or court judgments.
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EUR/USD stays in positive territory above 1.0850 after US data
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EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
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GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
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Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
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Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
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