US Industrial Output Growth Hits a 6-month High

Table of Contents:

1. Market Moving Headlines

2. Interest Rates

3. Currencies

4. Commodities

5. Concept of the Week: Risk versus Speculation

6. Quote of the Week

• Industrial output in the US rose 1% in July 2023, the most in six months.

• Retail sales in the US were up 0.7% month-over-month in July 2023, beating a 0.4% forecasted increase.

• US homebuilder sentiment unexpectedly falls.

• EU natural gas futures surge by 15%.

• Canadien inflation rate increases more than expected.

• Current zinc prices fell to a 2.5 month low.

• US housing starts increased more than expected.

• Gold retreats from a 5-month low.

• US 10-year Treasury yield approached a 15-year high.

• US mortgage applications fall for a 4th week in a row.

Interest Rates

Currencies

Commodities

Concept of the Week: hedging loan commitments

Hedging loan commitments provide several benefits to financial institutions. These benefits help manage and mitigate risks associated with changes in interest rates and other market variables. A few of the key benefits from hedging loan commitments include:

• Risk Mitigation

• Predictable Cash Flows

• Stable Margins

• Enhanced Borrower Relations

• Regulatory Compliance

• Strategic Flexibility

• Improved Risk Management

• Competitive Advantage

• Reduced Volatility

• Enhanced Capital Allocation

It’s important to note that while there are many benefits to hedging loan commitments, there are also potential costs and risks. These can include transaction costs and imperfect hedges. However, a well thought out and designed loan commitment will have benefits that outweigh the transaction costs and minimize the risk of imperfect hedges.

Quote of the Week

“By failing to prepare, you are preparing to fail.” – Benjamin Franklin

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