When I graduated from Lund University in June 2014, I had already signed the employment contract with Nordea Markets. I felt as much prepared as possible after four years of studies and my excitement to join the banking industry and the leading Markets division in the Nordics was enormous. After my first week I realized that I had entered a world that’s constantly changing.
Since the beginning of July I’ve been working at the Corporate Derivatives desk, a three person strong team dedicated to interest rate risk management. In total we are 14 people specialized in foreign exchange and interest rates here on the Swedish west coast. Before I came to Nordea I worked part-time at a private banking division in another Swedish bank alongside my finance studies in Lund.
I’ve always been interested in risk management and I wrote both my bachelor’s- and my master’s thesis on the subject of foreign exchange risk management. I thought I wanted to work with FX after my graduation but when the chance to work with interest rates came I did not hesitate for a second. For every day that’s passed since I’ve become more and more passionate about rates. In the world of interest rates, just like in the world of foreign exchange, you have to adapt to the constantly changing conditions of the market. For instance, on the 28th of October, the Swedish Riksbank cut the Swedish repo rate to 0%. The consequence of this was a downshift in other interest rates such as the Swedish swap rates and the Stibor rates and hence; we had to adapt to a new reality that had changed over the course of an hour. This is what I like the most about my job; I always have to be alert and ready to adapt to new market conditions. If I’m not able to adapt, how should my customers be able to adapt when the playing field changes?
Interest rate risk management is the art of creating debt portfolios that fulfills certain criteria. It’s not just a never ending quest to minimize the interest paid by corporate customers on their loans; it’s also about optimizing portfolio duration, loan amortization, hedge ratios and so on. It’s a varying and challenging job that requires me to be updated on market happenings at all times. Every day we’re presented with new economic data from the Nordics, Europe, USA, Asia etc. GDP figures can change the economic outlook of a country, CPI statistics (consumer price index = inflation) changes the way central banks all over the globe reason about their policy rates and NFP (nonfarm payrolls) in USA indicates the strength of the American labor market. If a customer calls and asks why the market is moving I need to have an answer, which means that I need to be up to speed on the latest market news. To be up to speed and prepared for the day ahead we start every day with a morning meeting that covers macroeconomic events during the upcoming day.