> Everyone who have ever managed bond portfolio knows that he must hedge interest rate risk. And every bank is doing that.
How are other banks hedging interest rate risk?
And how is the opposite end of this hedge hedging their position?
How are other banks hedging interest rate risk?
And how is the opposite end of this hedge hedging their position?
Plenty of financial functions create natural short interest rate exposure. Like SVB, they have no business speculating on rates, so they hedge it away. (The Fed is also involved in the repo market.)