NY Fed President William Dudley says the bank has the tools to keep its much-bigger balance...
NY Fed President William Dudley says the bank has the tools to keep its much-bigger balance sheet from spiking inflation. Tyler Durden notes the admission of the Fed's interest-rate risk if there's a robust rebound : "Good to know what exactly the Fed will never let interest rates do. Not to mention that there are roughly $300 trillion in derivatives betting alongside Bill's bet against interest rate Black Swans."
Recommended For You
Comments (2)
Revised Question: I suppose that there can't be a net derivative exposure against interest rates rising, can there? For every derivative, someone bets say for interest rate rise and the counter party bets against. Therefore these are side bets.The problem comes if one institution has a large net exposure to rates rising (or falling). should that scenario occur - the institution would be wiped out (actually the Fed would step in to cover the derivatives). Does anyone know if any of the banks have a large net exposure??
Tyler Durden said: "Good to know what exactly the Fed will never let interest rates do. Not to mention that there are roughly $300 trillion in derivatives betting alongside Bill's bet against interest rate Black Swans. It will be truly entertaining to watch what happens if China really does stop playing ball and the entire scenario has to be reevaluated while hundreds of billions in net derivative exposure comes crashing down"Just curious exactly what Tyler means by this. 1. There are 300 T in notional amount of derivatives. this is not the face value. Tyler seems to be implying that all 300 T in notional derivatives are betting AGAINST an interest rate rise. I seriously doubt this is the case. Does anyone know what the net derivative exposure is against interest rates rising ?