Callahan Clients, please log in for direct access to:
Learn What You're Missing
Upgrade Your Subscription
Thank you for your interest in reading the fantastic content we have on CreditUnions.com! However, the page you are trying to access is for subscribers-only. To learn more, select an option below.
All users must now log in to read, research, browse, and have fun on CreditUnions.com. Yes, we still offer freebies. And, yes, it’s worth the extra effort.
Print or PDF this article today because you won't have access to it later. Or, click here to learn how to get 24/7 access.
By Trust for Credit Unions Mutual Funds
As evidenced by last week's volatility in the capital markets after the FOMC released the minutes from its meeting, the words and tone the Fed uses in their accompanying statement generates more volatility than their actual decision. The Volatility in the market comes from Fed watchers who decipher what certain statements from the Fed mean - or don't mean. The credit union manager is left with the challenging task of incorporating changing market expectations into their forecasts and daily operations.
Last week the Fed modified their wording from earlier statements by dropping the promise to keep rates on hold for a ''considerable period'' to saying it could be ''patient'' regarding rates. The market's reaction to the new language was that rates were going higher - sooner rather than later. The Bond Market was pummeled with the price of the 2, 5 and 10-year treasuries all dropping significantly following the announcement.
Incorporating the latest economic data and statements from policy makers into your credit union's balance sheet management process is integral. The change in rates effects, the pricing of deposits, duration of loans, and can cause investments to become ''in the money''. This requires management decisions about hedging strategies, expectations regarding the elasticity of core deposits, and the outlook for investments. A highly volatile market makes the decisions even more complex.
This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.
If you are interested in contributing an article on CreditUnions.com, please contact our Callahan Media team at email@example.com or 1-800-446-7453.
February 2, 2004
7/26/2012 04:14 PM
Very insightful and something that is probably overlooked in most credit unions.
Submit your email address to receive daily industry updates and web-only features.
P: (800) 446-7453 | F: (800) 878-4712
1001 Connecticut Ave. NW Suite 1001
Washington, DC 20036