I realize this is a harder way to look at the markets, but for those that have managed
the interest rate risk at life insurers, this is the way the best do it.
This allows investors to eliminate
interest rate risk at their investment horizon by simply holding a bond until maturity.
Not exact matches
Important factors that could cause actual results to differ materially from those reflected in such forward - looking statements and that should be considered in evaluating our outlook include, but are not limited to, the following: 1) our ability to continue to grow our business and execute our growth strategy, including the timing, execution, and profitability of new and maturing programs; 2) our ability to perform our obligations under our new and maturing commercial, business aircraft, and military development programs, and the related recurring production; 3) our ability to accurately estimate and manage performance, cost, and revenue under our contracts, including our ability to achieve certain cost reductions with respect to the B787 program; 4) margin pressures and the potential for additional forward losses on new and maturing programs; 5) our ability to accommodate, and the cost of accommodating, announced increases in the build
rates of certain aircraft; 6) the effect on aircraft demand and build
rates of changing customer preferences for business aircraft, including the effect of global economic conditions on the business aircraft market and expanding conflicts or political unrest in the Middle East or Asia; 7) customer cancellations or deferrals as a result of global economic uncertainty or otherwise; 8) the effect of economic conditions in the industries and markets in which we operate in the U.S. and globally and any changes therein, including fluctuations in foreign currency exchange
rates; 9) the success and timely execution of key milestones such as the receipt of necessary regulatory approvals, including our ability to obtain in a timely fashion any required regulatory or other third party approvals for the consummation of our announced acquisition of Asco, and customer adherence to their announced schedules; 10) our ability to successfully negotiate, or re-negotiate, future pricing under our supply agreements with Boeing and our other customers; 11) our ability to enter into profitable supply arrangements with additional customers; 12) the ability of all parties to satisfy their performance requirements under existing supply contracts with our two major customers, Boeing and Airbus, and other customers, and the
risk of nonpayment by such customers; 13) any adverse impact on Boeing's and Airbus» production of aircraft resulting from cancellations, deferrals, or reduced orders by their customers or from labor disputes, domestic or international hostilities, or acts of terrorism; 14) any adverse impact on the demand for air travel or our operations from the outbreak of diseases or epidemic or pandemic outbreaks; 15) our ability to avoid or recover from cyber-based or other security attacks, information technology failures, or other disruptions; 16) returns on pension plan assets and the impact of future discount
rate changes on pension obligations; 17) our ability to borrow additional funds or refinance debt, including our ability to obtain the debt to finance the purchase price for our announced acquisition of Asco on favorable terms or
at all; 18) competition from commercial aerospace original equipment manufacturers and other aerostructures suppliers; 19) the effect of governmental laws, such as U.S. export control laws and U.S. and foreign anti-bribery laws such as the Foreign Corrupt Practices Act and the United Kingdom Bribery Act, and environmental laws and agency regulations, both in the U.S. and abroad; 20) the effect of changes in tax law, such as the effect of The Tax Cuts and Jobs Act (the «TCJA») that was enacted on December 22, 2017, and changes to the interpretations of or guidance related thereto, and the Company's ability to accurately calculate and estimate the effect of such changes; 21) any reduction in our credit
ratings; 22) our dependence on our suppliers, as well as the cost and availability of raw materials and purchased components; 23) our ability to recruit and retain a critical mass of highly - skilled employees and our relationships with the unions representing many of our employees; 24) spending by the U.S. and other governments on defense; 25) the possibility that our cash flows and our credit facility may not be adequate for our additional capital needs or for payment of
interest on, and principal of, our indebtedness; 26) our exposure under our revolving credit facility to higher
interest payments should
interest rates increase substantially; 27) the effectiveness of any
interest rate hedging programs; 28) the effectiveness of our internal control over financial reporting; 29) the outcome or impact of ongoing or future litigation, claims, and regulatory actions; 30) exposure to potential product liability and warranty claims; 31) our ability to effectively assess, manage and integrate acquisitions that we pursue, including our ability to successfully integrate the Asco business and generate synergies and other cost savings; 32) our ability to consummate our announced acquisition of Asco in a timely matter while avoiding any unexpected costs, charges, expenses, adverse changes to business relationships and other business disruptions for ourselves and Asco as a result of the acquisition; 33) our ability to continue selling certain receivables through our supplier financing program; 34) the
risks of doing business internationally, including fluctuations in foreign current exchange
rates, impositions of tariffs or embargoes, compliance with foreign laws, and domestic and foreign government policies; and 35) our ability to complete the proposed accelerated stock repurchase plan, among other things.
Those federal rules, which double down on restrictions adopted in 2014 and stern warnings to lenders issued by OSFI earlier this summer, require banks to qualify borrowers
at higher
interest rates, impose additional limits on mortgages for buyers with small down payments, and compel financial institutions to share the
risk by taking out insurance policies on low - ratio mortgages.
All dividend stocks
risk a hit to earnings from
interest rates in the short term, says Rich Peterson, a senior director
at S&P Global Market Intelligence.
This year the Bank of Montreal upped the ante by offering five - year mortgages
at an
interest rate of 2.99 % — leading some to wonder whether its
risk management department had been ravaged by bovine spongiform encephalopathy.
«I will continue to act to ensure that household debt levels are sustainable, that lenders are acting prudently, and that increases in
interest rates or a housing market downturn don't put
at risk the economic growth we are working so hard to accelerate,» Morneau said.
Unsecured loans typically come
at a high
interest rate due to the
risk involved.
The ECB kept its benchmark
interest rate at zero percent on Thursday though Draghi suggested that downside
risks to the bloc's economy had diminished and its economic recovery picked up pace.
«Given the
risk that we have identified and the way those
risks are expected to play out, we think
interest rates are
at the right place... If the balance of
risks were to shift... then we would need to reconsider that balance of
risks and our position on it.»
«Gold is stuck between $ 1,238 - $ 1,260 with the
risk to skewed to downside based on rising expected
interest rates and failure to break higher which has left it vulnerable to profit - taking in the short term,» said Ole Hansen, the head of commodity strategy
at Saxo Bank.
At some point, investors who are conflating high - yielding consumer staples stocks with bonds or who are taking
interest rate risk in long - dated Treasurys will see drawdowns as well.
Such
risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which United Technologies and Rockwell Collins operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices,
interest rates and foreign currency exchange
rates, levels of end market demand in construction and in both the commercial and defense segments of the aerospace industry, levels of air travel, financial condition of commercial airlines, the impact of weather conditions and natural disasters and the financial condition of our customers and suppliers; (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; (3) the scope, nature, impact or timing of acquisition and divestiture or restructuring activity, including the pending acquisition of Rockwell Collins, including among other things integration of acquired businesses into United Technologies» existing businesses and realization of synergies and opportunities for growth and innovation; (4) future timing and levels of indebtedness, including indebtedness expected to be incurred by United Technologies in connection with the pending Rockwell Collins acquisition, and capital spending and research and development spending, including in connection with the pending Rockwell Collins acquisition; (5) future availability of credit and factors that may affect such availability, including credit market conditions and our capital structure; (6) the timing and scope of future repurchases of United Technologies» common stock, which may be suspended
at any time due to various factors, including market conditions and the level of other investing activities and uses of cash, including in connection with the proposed acquisition of Rockwell; (7) delays and disruption in delivery of materials and services from suppliers; (8) company and customer - directed cost reduction efforts and restructuring costs and savings and other consequences thereof; (9) new business and investment opportunities; (10) our ability to realize the intended benefits of organizational changes; (11) the anticipated benefits of diversification and balance of operations across product lines, regions and industries; (12) the outcome of legal proceedings, investigations and other contingencies; (13) pension plan assumptions and future contributions; (14) the impact of the negotiation of collective bargaining agreements and labor disputes; (15) the effect of changes in political conditions in the U.S. and other countries in which United Technologies and Rockwell Collins operate, including the effect of changes in U.S. trade policies or the U.K.'s pending withdrawal from the EU, on general market conditions, global trade policies and currency exchange
rates in the near term and beyond; (16) the effect of changes in tax (including U.S. tax reform enacted on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act of 2017), environmental, regulatory (including among other things import / export) and other laws and regulations in the U.S. and other countries in which United Technologies and Rockwell Collins operate; (17) the ability of United Technologies and Rockwell Collins to receive the required regulatory approvals (and the
risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the merger) and to satisfy the other conditions to the closing of the pending acquisition on a timely basis or
at all; (18) the occurrence of events that may give rise to a right of one or both of United Technologies or Rockwell Collins to terminate the merger agreement, including in circumstances that might require Rockwell Collins to pay a termination fee of $ 695 million to United Technologies or $ 50 million of expense reimbursement; (19) negative effects of the announcement or the completion of the merger on the market price of United Technologies» and / or Rockwell Collins» common stock and / or on their respective financial performance; (20)
risks related to Rockwell Collins and United Technologies being restricted in their operation of their businesses while the merger agreement is in effect; (21)
risks relating to the value of the United Technologies» shares to be issued in connection with the pending Rockwell acquisition, significant merger costs and / or unknown liabilities; (22)
risks associated with third party contracts containing consent and / or other provisions that may be triggered by the Rockwell merger agreement; (23)
risks associated with merger - related litigation or appraisal proceedings; and (24) the ability of United Technologies and Rockwell Collins, or the combined company, to retain and hire key personnel.
«We will have moved away from the old style boxes, like growth, value, large cap and so forth, and see these replaced by a series of
risk factor - related products, like
interest -
rate sensitive products,» said Celia Dallas, chief investment strategist
at investment consultant Cambridge Associates.
To be sure, low
interest rates mean that annuity payments, including those from QLACs, are relatively modest now and investors run the
risk that inflation will eat away
at payouts over time.
«The public funds,
at least in Pennsylvania, are structured to enable the bank to make a loan that they might not be able to make without the public debt behind them by enhancing the loan - to - value, reducing the
risk to [the bank], and then passing on some benefits [to the borrower] in the form of lower
interest rates, which help cash - flow issues.»
The continuing highlighting of household imbalances, despite noting that the
risks have in fact lessened somewhat in the past six months, suggests the central bank remains worried that with
interest rates likely to continue
at near emergency low levels, the dangers of something going off the rails intensifies.
«
Interest rates can't stay this low forever, because there exists the real
risk of the economy getting overheated,» says Alex Nikolsko - Rzhevskyy, an associate professor of economics
at Lehigh University.
With the 10 - year yield (
risk free
rate)
at roughly 2.55 %, and the Fed Funds
rate at 1.5 % (two more 0.25 % hikes are expected in 2018), it's hard to see
interest rates declining much further.
With
interest rates at record lows, family and friends may be willing to take a higher
risk for a higher short term return.
The presentation suggested that such a facility would allow the Committee to offer an overnight,
risk - free instrument directly to a relatively wide range of market participants, perhaps complementing the payment of
interest on excess reserves held by banks and thereby improving the Committee's ability to keep short - term market
rates at levels that it deems appropriate to achieve its macroeconomic objectives.
While it's still not known when
interest rates will go up and by how much, what we do know is that the bond market is
at greater
risk to rising
interest rates than
at any time in recent history.
The fact that
rates have been so low for so long, but are rising
at the moment, has investors really nervous about
interest rate risk.
All three of these reasons — evidence that U.S. monetary policy is currently only moderately accommodative, the fact that U.S. financial conditions have been influenced by economic and financial market developments abroad, and
risk management considerations — argue,
at the moment, for caution in raising U.S. short - term
interest rates.
For the uninitiated, a bond ladder is a way to spread out
interest rate risk by buying bonds that mature
at different times.
However,
at today's yield levels, inflation and
interest rate risk have to be accounted for.
Confronted with the choice of whether to «lean» or to «clean» — leaning against emerging financial imbalances by keeping
interest rates higher than they otherwise would be or cleaning up in the event the
risks they create are realized by providing stimulus — central bankers
at that time generally agreed that cleaning would be best.
Factors that could cause or contribute to actual results differing from our forward - looking statements include
risks relating to: failure of DBRS to
rate the Notes
at the anticipated
ratings levels, which is a closing condition, or
at all; changes in the financial markets, including changes in credit markets,
interest rates, securitization markets generally and our proposed securitization in particular; the willingness of investors to buy the Notes; adverse developments regarding OnDeck, its business or the online or broader marketplace lending industry generally, any of which could impact what credit
ratings, if any, are issued with respect to the Notes; the extended settlement cycle for the scheduled closing on April 17, 2018, which may exacerbate the foregoing
risks; and other
risks, including those described in our Annual Report on Form 10 - K for the year ended December 31, 2017 and in other documents that we file with the Securities and Exchange Commission from time to time which are or will be available on the Commission's website
at www.sec.gov.
Bonds are also subject to reinvestment
risk, which is the
risk that principal and / or
interest payments from a given investment may be reinvested
at a lower
interest rate.
«The biggest challenge is delevering, but it presents the opportunity of borrowing
at a lower
rate of
interest,» Gross said, noting that investors must be sure that the assets they're buying this year are creditworthy and present low
risk exposure.
And did that do anything in the first place, other than to boost
risk assets and «encourage» policymakers in Congress to spend
at Fed - influenced low
interest rates?
On the other hand, it is important to note that the spread between earnings price ratios and real
interest rates are
at near record levels, and that is a crude measure of the equity
risk premium.
How to minimize
risk at a time when persistent low
interest rates have left many pension plans underfunded.
The investment team looks
at many factors when assessing
risk for each proposed bond, including but not limited to, issuer specific credit
risk, sector
risk,
interest rate risk, and liquidity
risk.
Put simply, even taking account of current
interest rate levels, and even assuming that stocks should be priced to deliver commensurately lower long - term returns, we currently estimate that the S&P 500 is about 2.8 times the level
at which equities would provide an appropriate
risk premium relative to bonds.
Given the absence of a public trading market of our common stock, and in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately - Held Company Equity Securities Issued as Compensation, our board of directors exercised reasonable judgment and considered numerous and subjective factors to determine the best estimate of fair value of our common stock, including independent third - party valuations of our common stock; the prices
at which we sold shares of our convertible preferred stock to outside investors in arms - length transactions; the rights, preferences, and privileges of our convertible preferred stock relative to those of our common stock; our operating results, financial position, and capital resources; current business conditions and projections; the lack of marketability of our common stock; the hiring of key personnel and the experience of our management; the introduction of new products; our stage of development and material
risks related to our business; the fact that the option grants involve illiquid securities in a private company; the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given the prevailing market conditions and the nature and history of our business; industry trends and competitive environment; trends in consumer spending, including consumer confidence; and overall economic indicators, including gross domestic product, employment, inflation and
interest rates, and the general economic outlook.
Indeed, a combination of lower
interest rates and more stringent macroprudential policy would likely work to reduce both financial stability
risks and the
risk of an undershoot of inflation
at the same time.
Against this backdrop, Governing Council decided to leave our key policy
interest rate unchanged, as we judged that the balance of
risks at present are still within the zone for which the current policy setting remains appropriate.
But it is extremely important to understand: it is the inflation - adjusted
risk - free
interest rate in an economy — the real
interest rate that is neither stimulative nor contractionary when an economy is operating
at full capacity without cyclical forces
at play, thus balancing desired savings and investment.
Specifically, Defendants made false and / or misleading statements and / or failed to disclose that: (i) the Company was engaged in predatory lending practices that saddled subprime borrowers and / or those with poor or limited credit histories with high -
interest rate debt that they could not repay; (ii) many of the Company's customers were using Qudian - provided loans to repay their existing loans, thereby inflating the Company's revenues and active borrower numbers and increasing the likelihood of defaults; (iii) the Company was providing online loans to college students despite a governmental ban on the practice; (iv) the Company was engaged overly aggressive and improper collection practices; (v) the Company had understated the number of its non-performing loans in the Registration Statement and Prospectus; (vi) because of the Company's improper lending, underwriting and collection practices it was subject to a heightened
risk of adverse actions by Chinese regulators; (vii) the Company's largest sales platform and strategic partner, Alipay, and Ant Financial, could unilaterally cap the APR for loans provided by Qudian; (viii) the Company had failed to implement necessary safeguards to protect customer data; (ix) data for nearly one million Company customers had been leaked for sale to the black market, including names, addresses, phone numbers, loan information, accounts and, in some cases, passwords to CHIS, the state - backed higher - education qualification verification institution in China, subjecting the Company to undisclosed
risks of penalties and financial and reputational harm; and (x) as a result of the foregoing, Qudian's public statements were materially false and misleading
at all relevant times.
Rates on government student loans are always fixed, and don't take into account the credit
risk posed by the borrower, however you can take a look
at what the average student loan
interest rate is.
The Financial Services Authority (OJK) said it was considering setting a cap on
interest rates and the size of loans offered by fintech firms, in a move aimed
at minimizing the
risk of defaults.
James Murad, a director in the finance and capital advisory division
at Eastern Consolidated, said the problem for a lot of NYC developers is that lenders (particularly traditional players with reasonable
interest rates) are also shying away from
risk in this market and often won't touch a stalled project saddled with debt.
As the indicator in Chart 4 suggests, even as the Fed has recently raised
interest rates under their control, monetary conditions remain a long way from being sufficiently «tight» to restrict financial system liquidity and putting the economic expansion
at risk.
Interest rate risk is worth considering since volatility is heightened
at lower yield levels.
This is evident in a number of developments, including: increased demand for higher -
risk assets; the increase in «carry trades» — a form of gearing where funds are borrowed short - term
at low
interest rates and invested in higher - yielding assets, often in other countries; growth in alternative investment vehicles such as hedge funds; and growth in alternative investment strategies such as selling embedded options (see Box A).
As usual, I don't place too much emphasis on this sort of forecast, but to the extent that I make any comments
at all about the outlook for 2006, the bottom line is this: 1) we can't rule out modest potential for stock appreciation, which would require the maintenance or expansion of already high price / peak earnings multiples; 2) we also should recognize an uncomfortably large potential for market losses, particularly given that the current bull market has now outlived the median and average bull, yet
at higher valuations than most bulls have achieved, a flat yield curve with rising
interest rate pressures, an extended period of internal divergence as measured by breadth and other market action, and complacency
at best and excessive bullishness
at worst, as measured by various sentiment indicators; 3) there is a moderate but still not compelling
risk of an oncoming recession, which would become more of a factor if we observe a substantial widening of credit spreads and weakness in the ISM Purchasing Managers Index in the months ahead, and; 4) there remains substantial potential for U.S. dollar weakness coupled with «unexpectedly» persistent inflation pressures, particularly if we do observe economic weakness.
At higher
interest rates, banks would have more options to generate returns while taking less
risk (Federal Reserve's ultra-low
rates have pushed financial market participants into riskier behaviors such as taking higher
interest rate risk, credit
risk, etc):
As we covered this spring (WILTW May 25, 2017), the International Monetary Fund's annual Global Financial Stability report included a stark warning about the health of the U.S. economy: 22 % of U.S. corporations are
at risk of default if
interest rates rise.
Seven years after the great financial crisis of 2008, the world economy remains
at high
risk of a new slump despite continued ultra low
interest rates.