HedgeTalk Newsletter: Inflation and Jobs Data Lead this Week's Headlines
Minneapolis, MN | April 13, 2023 | By: John Trefethen, Director & Co-Founder
Table of Contents:
Market Moving Headlines
Interest Rates
Currencies
Commodities
Concept of the Week: Risk versus Speculation
Quote of the Week
Market Moving Headlines
US inflation rate below forecasts at 5% in March 2023
US economy adds less jobs than expected in March 2023
The unemployment rate in the US edged down to 3.5% in March 2023
The dollar strengthened sharply on Monday with the US dollar index (DXY) hitting 103
Natural gas prices surge by more than 8%
Chile posts widest trade surplus in nearly 16 years
Car production in Mexico rises to over 2-year high
Russian ruble depreciates to it lowest in a year and below pre-war levels
The IMF revises its global growth forecasts lower by 0.1% to 2.8% for 2023
Lithium carbonate prices have sunk by 60% year-to-date
The NFIB Small Business Optimism Index in the US falls to a three-month low
Interest Rates
Currencies
Commodities
Concept of the Week: Hedge Accounting Treatment for Derivatives
When using derivatives for hedging risk, it is important to apply the proper accounting treatment relative to the hedging strategy. By applying hedge accounting, the derivative’s periodic changes in value can be kept from adversely impacting earnings. The hedge accounting treatment is determined by:
The intended use of the derivative, and
The hedge designation elected at the inception of the hedge
The most likely hedge accounting scenarios are shown below.
Applying the appropriate hedge accounting is the best way to ensure earnings volatility does not occur due to hedging activity.
Quote of the Week
“There are three ways to deal with risk: avoid it, retain it, or transfer it.” - Garret Gunderson
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Author: John Trefethen, Director and Co-Founder
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