3/23/2026: Volatility!
- DCG
- Mar 23
- 2 min read
Updated: 3 hours ago
The DCG advisory consulting team starts every week with an internal discussion of market trends, regulatory developments, and the real experiences of our bank and credit union clients. Here are the notes from this week’s Monday Morning Meeting.
Check out the meeting notes from previous weeks.
Do you have a question?
This week’s lively discussion reinforced a clear theme: volatility!
In the last month, the 5-year Treasury has increased roughly 50 basis points. Daily swings of 10 -15 basis points are becoming common.
We are asking clients how they are factoring this volatility and these extreme swings in rates into pricing, hedging, and balance sheet decisions. An institution’s balance sheet strategy philosophy is tested in times like this. Being proactive and on the same page as an ALCO team will lead to better results than merely reacting to the environment around us (rates and competition).
The question shouldn’t be, “Will rates go up or down next?” It’s, “Are institutions prepared and disciplined to act decisively in an environment where neither direction is predictable?”
Balance sheet strategy isn’t about being right; it’s about being ready.
Funding and loan pricing discipline, investment strategies, and hedging strategies all require a proactive plan before volatility hits, not reactive after the fact.
Questions for institutions to consider:
Deposit Pricing – Would you prefer funding growth without funding cost relief in 2026 or funding cost relief with some deposit attrition?
Has the recent volatility been factored into your loan pricing? If not, why?
Are you being paid adequately for credit risk today as compared to “risk free” alternatives in the investment world?
Interest rate swaps, caps, and floors are great tools to help manage risk. Are those tools in your toolbox?
ALCO has never been about predicting interest rates. The current volatility highlights why trying to predict is a fool’s game. Discipline and proactive strategy will reward institutions in 2026!
What are others seeing?
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