The Corporate Hedging Monitor Q2 2026
After starting 2026 in a more defensive position, corporates quickly changed course in Q2, with senior finance decision-makers across the UK and US reporting hedge ratios and tenors falling to series lows, after hedge ratios reaching a record high in Q1. With many respondents expecting central banks to raise rates over the rest of the year, the question now is whether the retreat in hedging will last, or whether diverging rate expectations will prompt firms to increase protection once again.
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Corporates reduce FX cover in Q2
Hedge ratios fell, reversing last month’s record high, whilst average tenors shortened to a series low.
Rate expectations could shift strategies
Whether the pullback continues remains to be seen, with higher rate expectations potentially prompting firms to adjust their approach.
Central bank policy leads hedging considerations
Policy uncertainty remains a key influence on hedging decisions, alongside broader market and inflation pressures.
Record-low levels of protection leave less room for error if rate paths diverge further or currency volatility increases
Eric Huttman
CEO of MillTech
Corporate hedging retreats in Q2 as ratios and tenors hit series lows, while diverging rate paths raise fresh questions.