Key Takeaways with Craig

The FOMC kept its Fed Funds target rate steady at the conclusion of their meeting today, but also suggested there might be one more rate hike this year.  Interestingly, CME’s FedWatch tool still suggests a 54.9% likelihood that the target rate remains at its currently level after the last meeting of the year in December.  US Equity index prices wound up lower on the day with the Nasdaq leading losses, down by over 1%.  Somewhat unsurprisingly, implied volatility in CME’s Equity Index options rose today with the E-mini S&P 500 30-day at the money volatility trading above its 3 month average and the Nasdaq-100 trading at the 3 month average. 

US Treasury yields at the short end of the curve rose with the Micro 2-Year Yield future up by about 5 basis points while the more deferred maturities were near steady on the day.  In the Treasury options markets, CVOL levels fell in all four tenors while the skew in the 2-Year (again in yield terms) fell again.  As we talked about yesterday, this indicates that the volatility in the Puts was higher relative to the Calls than it was yesterday, despite the increase in yields.  In fact, the skew in the 2-Year Treasury options is as low as its been since the end of May.    

In other CME markets, WTI Crude Oil futures prices were down by about 1.25% and are again trading under $90 per barrel while the US Dollar rallied from previous losses versus other major currencies in CME’s FX futures markets to end up near steady. 

We used CME FedWatch data to create the graph below that shows the historical probability of different Fed Funds target rates.  As you can see in the red line, the current target range (525-550), still remains over 50% while the gray line, which represents a 25 basis point hike in December, is at about 38%.  

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.

CME Group is the world’s leading derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). 
Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX.

© 2024 CME Group Inc. All rights reserved.