NEW YORK–Bloomberg has reportedly been telling users of its terminals to prepare for interest rates in the United States to plunge below 0%, but in this case it isn’t so much a forecast as it is preparation to avoid some of the technical glitches that have been seen in recent months.
According to the Financial Times, Bloomberg sent a note to users of its terminals urging its users to review their computer models used for determining interest rate volatility, which is a vital part of the equation when calculating the price of options and which allows holders to purchase or sell financial instruments at a specific point in time.
In its own analysis, Business Insider, which operates a Bloomberg terminal, said it could find no evidence of having received such a note.
The Financial Times said the company reportedly told users to switch to a new model as a precautionary measure. It is also said to be making equivalent changes to its forex and commodities pricing models.
As CUToday.info has reported, the Fed has said it has plans to keep its benchmark interests close to zero through at least the end of 2022, and Fed Chairman Jerome Powell has said he does not envision negative interest rates in the U.S.
The Bloomberg note of caution was reportedly motivated in part by U.S oil prices, which in April briefly turned negative, leading to millions of dollars in losses by some companies after they were unable to display negative prices.