At-a-Glance
Key Takeaways with Craig
After a quieter beginning to the week yesterday, today was anything but, as Equity prices fell and the 2-Year Treasury yield rose after Fed Chairman Jerome Powell’s testimony to the US Senate. All four major US indexes were down by over 1% with the Dow Jones Industrials leading the losses. The Micro 2-Year Treasury Yield future was up another 11 basis points, which widened the inversion with the Micro 10-Year to nearly 100 basis points, as the Micro 10-Year was near steady on the day. Unsurprisingly, implied volatility in CME’s Equity Index and Treasury options rose today, but the skew in the 2-Year and 10-Year yields diverged. The purple line in each graph below depicts the skew and the blue line, the CVOL level in the 10-Year yield (top graph) and 2-Year yield (bottom graph). As you can see, overall implied volatility in both tenors increased with today’s action; however, in the 10-Year, the Puts were bid over the Calls whereas the Calls were higher versus Puts in the 2-Year.
Perhaps correlated with the increase in yields, the US Dollar was higher versus most major currencies in CME’s FX futures markets. Specifically,
- Aussie Dollar was down nearly 2%
- Canadian Dollar, Swiss Franc and Euro FX were down by about 1%
- British Pound was down by about 1.6%
CME’s Metals markets were active as well with Gold futures prices down by about 2%, Silver down by 4.6% and Platinum down by 4.5%. The aggregate CVOL level was little changed on the day but the Puts are trading as high relative to the Calls as they have in at least 3 months.
Finally, CME's FedWatch tool now shows a 70% probability for a 50 basis point hike to the Fed Funds Target Rate and 30% for a 25 basis point hike. Yesterday, it reflected the inverse of that.
Todays Featured Videos
Today's Future Price Action
Traders Resources
The information in the market commentaries have been obtained from sources believed to be reliable, but we do not guarantee its accuracy and expressly disclaim all liability. Neither the information nor any opinions expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts. The information on this site compiled by CME Group is for general purposes only. All information and data herein is provided as-is. Additionally, all examples on this site are hypothetical situations, used for explanation purposes only, and should not be considered investment advice or the results of actual market experience. CME Group assumes no responsibility for any errors or omissions. CME Group, its affiliates and any third party information and content providers expressly disclaim all liability with respect to the information and data contained herein including without limitation, any liability with respect to the accuracy or completeness of any data. You use the data herein solely at your own risk. All data and information provided herein is not intended for trading purposes or for trading advice. All matters pertaining to rules and specifications herein are made subject to and superseded by official CME, CBOT, NYMEX and COMEX rules. Current rules should be consulted in all cases concerning contract specifications.
Neither futures trading nor swaps trading are suitable for all investors, and each involves the risk of loss. Due to the leveraged nature of futures trading and swaps trading, it is possible to lose more than the amount deposited in a position. Therefore, traders should not deposit more funds than they can afford to lose without negatively affecting their lifestyles. A trader cannot expect to profit on each trade, and should only devote a small amount of their available funds to each trade. All references to options refer to options on futures.
Past performance is not necessarily indicative of future performance.
CME Group, the Globe Logo, Chicago Mercantile Exchange, Globex and CME are trademarks of Chicago Mercantile Exchange Inc. CBOT is the trademark of the Board of Trade of the City of Chicago, Inc. NYMEX is the trademark of the New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other marks are the property of their respective owners. Each of Chicago Mercantile Exchange Inc. (ARBN 103 432 391), The Board of Trade of the City of Chicago Inc (ARBN 110 594 459), the New York Mercantile Exchange Inc (ARBN 113 929 436) and Commodity Exchange, Inc. (ARBN 622 016 193) is a registered foreign company in Australia and holds an Australian market licence.
This site does not constitute a prospectus, product disclosure statement or legal advice, nor is it a recommendation to buy, sell or retain any specific investment or to utilise or refrain from utilising any particular service. Readers should consult their legal advisors for legal advice in connection with the matters covered on this site.
