US Industrial Output Growth Hits a 6-month High

Minneapolis, MN | August 17, 2023 | By: John Trefethen, Director & Co-Founder

Table of Contents:

Market Moving Headlines
Interest Rates
Currencies
Commodities
Concept of the Week: Risk versus Speculation
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

green, grey and white US treasury market chart

green, grey and white 2Y-10Y Spread Chart

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.