| Finance chiefs use hedging to address economic disruptions |
With the stock market flirting with correction territory, whiplash from President Donald Trump’s erratic tariff policy, and uncertainty about fast-changing federal policy impacts on labor and supply chains, finance chiefs are facing intensifying pressure this year to assess and offset risk. The CBOE Volatility Index, known as the VVIX, which tracks expected S&P 500 volatility, has eased in recent days but it still remains above its long-range average of 19.5, closing at 21.77 on Friday. The volatility has made for brisker interest rate hedging activity this month, according to John Wahr, head of sales for U.S. Bank’s derivative products group, as companies reassess their risk exposure and adjust to market conditions. “In periods like this where you have heightened volatility in the market across different asset classes, usually what we see is interest rate hedging . . . becomes a higher priority for a lot of CFOs and treasurers,” he said. At the same, he characterized the volatility as “second tier” when compared to that seen during the COVID-19 pandemic, and described the level of activity traders are seeing as “manageable but a nice pick-up in flows.”
