Recent Articles

5th October 2015
USD Outlook: Safe Haven vs. Carry Trade

Poor US payroll data on Friday (142K jobs added, compared to an expectation of 200K) have placed further doubts on whether or not the Fed can risk raising rates this year. The market-implied probability of a 2015 rate hike is now about 30%, down from about 80% in August, and the USD swaps curve is about 10-20 basis points lower than it was a month ago, at virtually every tenor out to 30 years.


It is not surprising to us that the Fed has been reluctant to raise rates for the first time in almost a decade. As we noted back in June: “The bottom line is that we continue to believe that the interest rate path implied by the current yield curve is likely to prove excessive.” (‘Will the Fed raise rates this year?” link). Back when we wrote this, the US 10 year swap rate was about 2.50% -...

more >
28th September 2015
Yellen Fuels Further Uncertainty

After the Fed elected to keep its monetary policy unchanged at its meeting earlier this month, there was a general perception that the committee was taking a cautious stance in the wake of the problems in China. Nonetheless, the consensus was that the delay will only be temporary and we can expect the first hike in December.


A poll by Reuters in the aftermath of the Fed meeting on 17th September showed that 72 out of 93 economists expect the Fed to raise rates in December. However, futures markets weren’t quite so sure and were only pricing in a 50% chance of a hike. After last week’s weaker than expected factory data from China, this number fell to 39.3% although at the time of writing, the number has increased slightly to 42.9% (see chart below).


28.09 pic 1


Data Source: Bloomberg


Last week Yellen attempted to offer further clarity with regards to the committee’s thinking, stating...

more >
21st September 2015
Fed Maintains Cautious Approach to Monetary Policy

In the build-up to last week’s FOMC meeting, markets had become increasingly sceptical about whether the committee will follow through on its threat to begin tightening policy. Hence, despite the vote of no change, we shouldn’t be too surprised that currencies, equities, commodities and rates remain broadly as they were pre-announcement.


That is not to say that the vote to keep rates on hold was fully priced in. During the immediate aftermath of the announcement, the euro spiked from 1.1300 to 1.1440 and sterling jumped from 1.5500 to 1.5630. But the initial reaction hasn’t been sustained and as we begin a new week, both EUR/USD and GBP/USD are back at exactly the same levels as they were before the decision.


In order to decipher what this means for policy going forward (and therefore the outlook for the dollar) we should revisit Yellen comments and understand the rationale for keeping rates on hold....

more >
Older Entries >>>


White Papers


FX Hedging:

10 Common Pitfalls


Commodity & FX Risk:

An Integrated Approach


The Corporate Use of Credit Derivatives:

Where Next?


Corporate Hedger’s Guide to Basel III


Currency Volatility – Are markets nearing an inflection point?



Private Equity


 “The Validus team understand how private equity thinks about financial risk management issues and they are rigorous in the way they help our portfolio companies to understand and mitigate their risks.”


James Markham, Partner – Portfolio Management, Graphite Capital LLP


FX and Commodity Risk


“Validus provides us with independent strategic advice relating to our long-term currency and commodity risk management program.  The people are extremely capable and collaborate very well with our finance and operations teams here at JD Irving.”


Mark Bettle, Director, J.D. Irving Ltd.


Commodity Risk


“Validus worked with us to develop a comprehensive commodity risk management programme – their analysis was both insightful and actionable.   We particularly value their independence, and they continue to work alongside our internal team to ensure our commodity price risks are managed effectively”

Gerry Gray, Finance Director, Strix Ltd.


FX, Commodity & Interest Rate Risk


“Validus comes up with risk management solutions that are innovative and comprehensive but practical to implement, that is their strength compared to other consulting companies we have worked with in the past.  Validus provided valuable insights into how FX, interest rate and commodity risks impact our organisation, and provide actionable recommendations and solutions.”


Andrew Ayres, Finance Director, U-POL Ltd.

Recent Comments