Interest Rate Futures for Investors

Take more interest in interest rate decisions.

Most investors understand that interest rates can have an immediate impact on their bond portfolios. Rising rates translate into weaker bond prices; falling rates into rising bond prices.

But interest rates also have an important effect on investors’ equity portfolios, especially when their equity portfolios hold companies that operate in the financial and utility sectors of the economy. Since banks usually borrow at floating rates and lend at fixed rates, rising rates eat into their profit margins. Large utility companies typically have the biggest debt loads on their balance sheets, and as such, their valuations are also adversely affected by rise interest rates. Because these companies are typically blue-chip, high dividend payers, a considerable portion of an individual’s equity portfolio is allotted to them.

The Burak Hannon Brojde Group can help you offset equity portfolio losses by purchasing or selling interest rate futures.

Central banks around the world have the ability to tighten or loosen monetary policy in order to stem inflation, or stimulate economic growth. They meet regularly to determine the direction of interest rates in their respective countries. Looking for a pure way to play central bank decisions?  We can help you devise an interest rate strategy that will reflect your monetary policy views.