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Era of Dissonance
Financial markets have entered an Era of Dissonance that will stand in sharp contrast to the relative harmony and economic expansion of the last half of the 20th century. The Era of Dissonance will not easily or quickly resolve itself into a more comfortable environment. Volatility and correlation structures may change abruptly, forcing risk managers to take a forward-looking approach. Options valuation will have to deal with elevated vega risk given widely divergent scenarios. Foreign exchange markets, as a natural focal point of economic imbalances among countries, will play a critical role in transferring sources of volatility into other asset classes.
Read Full ReportRelated Reports:
Market Insights: The Political Splintering of Europe - May 7, 2012
FOMC Members Become Slightly More Optimistic - May 3, 2012
US Housing Market Looking Brighter for 2012 - March 15, 2012
Oil Market Dynamics and the Fear Factor - March 7, 2012
Easy Money, FOMC Transparency, and Rate Volatility - January 25, 2012
US Economic Outlook Upgraded for 2012 - December 16, 2011
China: Slower Export Growth, End of the Infrastructure Boom Years - December 12, 2011
Learn more about Blu Putnam, Chief Economist, CME Group
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| Market Insights: The Political Splintering of Europe - May 7, 2012 EU countries made progress in cutting spending in government budgets, but there are signs that voters are unhappy with current leadership and seek changes. |
| FOMC Members Become Slightly More Optimistic - May 3, 2012 FOMC did not change policy at its 24 - 25 April meet, but it did release member views that showed a shift...read on for opinions and charted projections. |
| US Housing Market Looking Brighter for 2012 - March 15, 2012 The US housing sector is poised for a good year — finally. It certainly has been a dark period for housing, yet the darkest hour is just before dawn. |
| Oil Market Dynamics and the Fear Factor - March 7, 2012 Crude oil prices are surging due to fears of potential supply disruptions related to the rising global tensions surrounding Iran's nuclear ambitions. |
| Fed Exercises "Greenspan Put" - January 30, 2012 FOMC issues a press release on Wednesday, January 25 indicating that it "expects to maintain a highly accommodative stance for monetary policy". |
| Easy Money, FOMC Transparency, and Rate Volatility - January 25, 2012 Bernanke on how the FOMC has taken steps toward transparency, incl. the release of FOMC participant views on the likely path of the federal funds rate. |
| S&P Downgrades Eurozone Sovereign Debt - January 23, 2012 Standard & Poor's downgrades long-term ratings of the European Financial Stability Facility (EFSF) to AA+. |
| US Economic Outlook Upgraded for 2012 - December 16, 2011 Bluford Putnam of CME Group on material improvements to the economic outlook for 2012. GDP, decreased unemployment and inflation rates are indicators. |
| China: Slower Export Growth, End of the Infrastructure Boom Years - December 12, 2011 China's rate of GDP growth is decelerating, for some very obvious and also some less obvious reasons. Blu Putnam explores domestic and global causes. |
| Central Banks Address Euro Debt Crisis - December 5, 2011 Board of Governors of the U.S. Federal Reserve System responds to distress apparent within the European banking system. Specific actions discussed. |
| Markets and Expectations in the Era of Dissonance - December 2, 2011 Risk management in an era of dissonance: developing strategies for risk management by better understanding the sources of the problems facing markets. |
| Pursuing "Risk-on Risk-off" Trades - November 17, 2011 The economic turmoil of the past year has led to increased interest in volatility hedging strategies. See how instruments like US T-bills and swap spreads can be used to your advantage. |
| Fed Announces Operation Twist v.2 - October 3, 2011 Motivated in part by the FOMC’s dour employment outlook and strains in global financial markets, the Federal Reserve announced it would initiate an updated version of Operation Twist. |
| "Eurostress" Implicit in Market Rates - September 19, 2011 The European sovereign debt crisis resulted in peak distress levels in May 2010 and again in June 2011. But the crisis remains far from resolved. |
| Robin Mesch Market Outlook - February 1, 2012 Mesch is a leading strategist in market theory. February 2012 edition covers crude, gold, E-mini S&P 500, 10-Year T-Notes. Includes Price Usage charts. |
| Dec-11 E-mini S&P 500 Roll Monitor - January 26, 2012 2012 Financing rates in the Dec 2011/Mar 2012 spread fell well below LIBOR. Review this situation and monitor it with CME Group's Equity Quarterly Roll analyzer. |
| Risk Management for Central Bankers - January 26, 2012 Central banks play a paramount role in the course of global economy. But they also experience market risks associated with foreign security holdings. |
| Annual Energy Outlook 2012 - January 23, 2012 Projections in the Annual Energy Outlook 2012 on what shapes U.S. energy markets long term, if current laws and regulations remain generally unchanged. |
| OTC Derivatives Market Monitor - December 6, 2011 BIS’s latest shows OTC and exchange traded derivatives industries recovered from downturn ala the subprime mortgage crisis, in terms of overt market size. |
| Interest Rate Futures Liquidity Report - October 21, 2011 This piece provides a quick snapshot of the recent volume, open interest, and overall depth of CME Group Interest Rate contacts. |
| Q3 2011 Volatility Monitor - October 6, 2011 Each quarter the CME Group Research looks at the liquidity of its flagship futures and options products. |
| Bottom Line vs Top of Book: Eurodollar Futures at CME Group and Elsewhere - October 3, 2011 Exchanges offer tight spreads and bargain level transaction and clearing fees to attempt to counter the CME Eurodollar futures order book. |
| Moving Out on the Yield Curve - September 28, 2011 This article summarizes the results of the mortgage and credit crisis on interest rate and Eurodollar futures and options. |
| Implied Financing in S&P 500 Futures - September 28, 2011 This article reviews the current conditions of the equities market and how to use CME Group’s Equity Quarterly Roll Analyzer to monitor. |
| Treasury Option Fundamentals for Fixed Income Asset Managers - September 6, 2011 Fixed income asset managers have many strategic alternatives available to them including the use of spot, futures and option markets in their pursuit of investment value (or "alpha") relative to market benchmarks. This document represents the first in a two-part series of articles addressing the use of options on the part of fixed income asset managers. It is intended to provide a review of the fundamentals of CME Group Treasury options. |
| Treasury Options Strategies for Fixed Income Investors - September 6, 2011 Today’s uncertain economic environment presents fixed income asset managers with unpredictable market circumstances and attendant risks in their ongoing search for "alpha" or returns above that offered on market benchmarks. This booklet is part two in a two-part series of articles that reviews the use of CME Group options in the context of risk management activities. |
| Crisis Alpha and Risk in Alternative Investment Strategies - April 13, 2011 Learn why some alternative investment strategies provide opportunities in times of crisis alpha while others do not. |
| In Search of Crisis Alpha: A Short Guide to Investing in Managed Futures - April 13, 2011 Crisis alpha refers to profits realized by Commodity Trading Advisors during times of crisis. |
| Inflation, Commodity Prices, and Portfolio Diversification - March 23, 2011 This two-page article examines what to consider when adding commodities to an investment portfolio. |
| Risk Management for Fixed Income Asset Managers - February 24, 2011 This report outlines the issues facing fixed income asset managers in the volatile capital markets of 2011. |
