Asked on the earnings call if a large increase in hedging activity is a sign the company...

|By:, SA News Editor

Asked on the earnings call if a large increase in hedging activity is a sign the company believes interest rates are set to rise, American Capital (AGNC +1.4%) CIO Gary Kain says not necessarily. The Fed's iron grip on the yield curve has driven bond volatility so low and made hedging so cheap, it doesn't make sense not to hedge - it's a nearly-free call on the chance of higher rates. This just in: Gary Kain knows his business.