In terms of risk management, what do Deliverable Swap Futures help asset managers address?

Deliverable Swap Futures are specifically designed to provide a mechanism for managing risks associated with interest rate swaps (IRS) and other fixed income securities. They allow asset managers to hedge their exposure to fluctuations in interest rates, which is a critical aspect of risk management in financial markets. This tool is particularly useful for managing the risks linked to the pricing and yield changes of swaps that underlie the futures.

By effectively providing a means to lock in prices and manage future interest rate risk, deliverable swap futures help asset managers to better navigate the complexities of the fixed income markets. They address concerns about changing market conditions and shifts in interest rates that could impact the value of their portfolios.

The focus on IRS markets and fixed income securities highlights the targeted nature of this financial instrument in hedging specific risks rather than broader financial risks. Other options, which suggest addressing only credit risk or market volatility alone, do not capture the comprehensive positioning of deliverable swap futures within the context of fixed income risk management.