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Quantitative Tightening, Volatility, and Considerations for Funding
At the October Federal Open Market Committee (FOMC) meeting, the FOMC statement indicated that reduction of the Fed’s balance sheet will end December 1, 2025, earlier than many in the market expected. The end of Quantitative Tightening may have implications for interest-rate volatility. FHLBank Boston offers advances with embedded options, like the HLB-Option and Member-Option Advance, for navigating interest-rate changes.
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Advance Restructuring Strategies to Enhance Earnings
Restructuring advances can improve earnings and interest-rate risk profiles without adding incremental funding.
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Funding Spread Lending Opportunities for Insurance Companies
As asset spreads become volatile and widen, insurance company members have several funding solutions to take advantage of spread lending opportunities. Whether the target assets are fixed-rate or floating-rate, with prepayable principal or in bullet structures, FHLBank Boston advances enable members to mitigate interest-rate risk and align asset and liability cash flows.
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Hedging Against Higher for Longer with Flexibility
Interest rates have not fallen as much as many expected at the beginning of 2025. The Member-Option Advance can help members manage interest-rate risk in a higher-for-longer environment while retaining flexibility to benefit in a down-rate scenario.
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Are Asset Quality Issues Out Front or in the Rearview?
As the Federal Reserve has pivoted to rate cuts, there has been some deterioration in asset quality. But will healthy loan-loss reserves at banks and credit unions be sufficient to absorb the issues or are earnings at risk?
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Balancing Liquidity and Interest-Rate Risks in a Fed Cutting Cycle
With short-term interest rates now moving lower, there are several advance solutions that can provide flexibility for members to manage constantly shifting liquidity needs and interest-rate risks.
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Margin Enhancement with Risk Mitigation
Restructuring advances can lower interest expense, reduce interest-rate risk, and enhance liquidity metrics.
