Bond Volatility & Interest Rate Swaps

``JPMorgan alone has $66 trillion in notional value of Interest Rate Swaps. They must constantly balance this load, in what is called dynamic hedging. That task has been rendered very difficult, if not impossible. The entire hedged position in IRSwaps remarkably exceeds the value of the entire USTreasury Bond market, a fact kept quiet by bank officials. With most IRSwap contracts, fixed net payments are made on a quarterly basis. So the hot fires that burn in big bank basements must be dealt with each quarter, as loss damages are assessed and paid for promptly. JPMorgan in all likelihood just is as insolvent and possibly bankrupt as Citigroup.''