Happy New Year and welcome back to all of our In FOCUS readers; we hope everyone enjoyed the holiday season!  Before diving into 2025, we’re using today’s column to look back on another eventful and exciting year in CME Group’s financial and commodity markets.  We used CVOL and QuikStrike data to compile the chart below that depicts the price and implied volatility information on the last trading day of 2023 and 2024.  We’ve also added columns that show the high and low price and implied volatility points in 2024 to give some perspective on the current levels.  Finally, the last column shows in simple, graphical form, the low, current and high price points for an easy way to view the current price and determine if it’s closer to the high or low 2024 levels.  Some highlights include:

Interest Rates

After raising its Fed Funds target rate to 5.25%-5.50% on July 26^th, 2023, the FOMC kept its target rate there until September 18^th, 2024, when it cut it by 50 basis points (bps).  It subsequently cut the target rate in November and December by 25 bps at each meeting, for a total of 100 bps on the year. 

Somewhat interestingly, since the day of the first target rate cut on 9/18, CME’s 2-Year Treasury Yield future has risen by 64 basis points and the 10-Year is up by about 89 bps, steepening the curve between the 2s and 10s to about 40 basis points at the end of 2024. 

CME’s FedWatch tool currently shows about a 90% probability that the Fed leaves its target unchanged at the meeting later this month and an approximately 50% chance of a rate cut at the March meeting. 

Equities

It was another strong year in the US Equities markets, as all four major US Indexes hit record levels at some point in 2024.  As you can see in the chart, both the E-mini S&P 500 and Nasdaq-100 futures prices were up by over 20% on the year. 

CME’s E-mini Russell 2000 was up by about 10% on the year and also offered a nice case study on why “index choice matters”.  On July 9^th, CME’s E-mini Russell 2000 was nearly steady on the year (it was actually down slightly), while the S&P 500 was up by about 17% and the Nasdaq-100 was up by about 21%. However, by July 30^th, the relative outperformance of the Russell 2000 index over those ~3 weeks had brought it almost in line with the Nasdaq-100 in year-to-date performance.  Of course, as we mentioned above, the S&P 500 and Nasdaq-100 outperformed the Russell 2000 from August through the end of the year, but we think this does underscore the idea that “index choice matters” and the opportunity that the diverse equity indexes at CME offer. 

 Gold

In addition to the Equity Index price records, the price of Gold hit all-time highs this year.  According to CME’s CVOL tool, the price of Gold futures closed at $2,800 an ounce at the end of October, marking the highest close in history and, probably not coincidentally, right before the much-anticipated US Presidential elections.  Gold prices have since retreated from these levels but, at around 2,650, remain at elevated levels relative to historical norms. 

WTI Crude Oil

CME’s WTI Crude Oil futures contract (CL) was relatively range-bound this year, closing between $70 and $80 per barrel on 151 of the 252 trading days.  Further, the lowest price at which CL closed was 65.14 and the highest was 86.91.  This price stability was reflected in options volatility as well, as we saw an average CVOL closing level of 33, versus the long-term average of about 39 if we go back to October, 2013 (the farthest back date for which we had CVOL data accessible). 

Bitcoin

As most people who pay even cursory attention to the financial news know, the price of Bitcoin (and cryptocurrencies in general) has skyrocketed since early November and the US Presidential elections.  It should come as no surprise then, that the price of Bitcoin in 2024 far outperformed the other products we looked at.  Of course, this price appreciation has come in a typically volatile chart pattern, and the price on the last day of the year, while up 121% from the prior year-end, was still down by about 13% from the highest close. 

Ags

And it wasn’t just Equity Indexes, Bitcoin and Gold that saw record prices this year.  CME’s Live Cattle market hit all-time highs with tight supplies and strong demand, while grains and oilseeds saw price declines in 2024.  Overall, CME’s Agricultural markets had a record setting year in terms of volume, as market participants continue to look at global weather and geopolitical events to help set price. USDA economic numbers continue to be extremely important to the marketplace with record weekly option volume of almost 100K contracts ahead of the November WASDE release.

FX

CME’s FX markets were also active this year, perhaps in part due to the volatility in the global interest rates market.  As you can see, the Euro traded in an 8.6% yearly range in 2024 and its CVOL level is relatively 26% higher than it was at the close of 2023.

Additionally, the Bank of Japan raised its interest rate for the first time in years in 2024, injecting some volatility into the Yen, as some of the “carry trade” unwound. 

So that’s 2024 in a Key Takeaways nutshell.  We look forward to continuing our market updates in the In FOCUS newsletter as we head into a year in which questions about inflation in the US remain, a new Presidential and Congressional administration will be inaugurated and geo-political tensions persist around the globe.