Interest Rates

Many companies mitigate the interest rate risk of their cash balance plans with floors using a binary approach. Here’s a better option.

Although U.S. interest rates are sitting at 23-year highs, the pockets of pain they are causing are nothing like the systemic problems that so often wrecked expansions in the past.

The majority of FOMC members expect to enact another rate hike before the end of this year.

The benchmark will have its last fixing at around 6:55 a.m. New York time on Friday, and some borrowers and lenders are still scrambling to amend contracts.

Economists now expect the federal funds rate to peak at 5.25%, vs. the 5% they expected just last month.

Large Wall Street dealers already stand to lose $5 million to $10 million if the spread between overnight and term SOFR moves against them by just 1 basis point, and their exposure grows with every new transaction.