Why Federal Funds futures are a key barometer for financial markets - Business Insider

  • 📰 BusinessInsider
  • ⏱ Reading Time:
  • 67 sec. here
  • 3 min. at publisher
  • 📊 Quality Score:
  • News: 30%
  • Publisher: 51%

Belgique Nouvelles Nouvelles

Belgique Dernières Nouvelles,Belgique Actualités

Why Federal Funds futures are a key barometer for financial markets CMEGroup ad

Perhaps the most-watched US financial benchmark — the Federal Funds target rate — is attracting significant new attention from traders as volatility returns to the US interest rate market, after a prolonged period of stable and very low rates.

FF contracts with longer terms to expiry also allow market participants to act on views as far ahead as a year where there is greater uncertainty, given that the Federal Reserve incorporates new economic data into each meeting's outcome.After a long period of interest rate stability in the wake of the global financial crisis, with a target range of 0-0.25%, the Fed announced a series of nine increases between 2015 and 2019 followed by a cut in autumn 2019.

Volume and open interest trended sharply upward, with visible spikes preceding rate changes. Even when compared to the most active periods of the low-interest era, both volume and open interest increased by around a factor of five. For 2019, average daily volume has reached nearly 400,000 contracts, with open interest around 2.2 million. Using the contract multiplier of $4,167, these numbers represent around $1.6 billion and $9 billion in notional exposure, respectively.

Over the last 15 meetings to September 2019, Fed Funds futures have priced an average around two basis points away from the target rate, with a maximum divergence of 11 bps when moves of 50-75 bps occurred regularly. The two outliers arose in January and October 2008, when the Federal Reserve made emergency cuts totaling 125 and 100 basis points for those months.

 

Merci pour votre commentaire. Votre commentaire sera publié après examen.
Nous avons résumé cette actualité afin que vous puissiez la lire rapidement. Si l'actualité vous intéresse, vous pouvez lire le texte intégral ici. Lire la suite:

 /  🏆 729. in BE

Belgique Dernières Nouvelles, Belgique Actualités

Similar News:Vous pouvez également lire des articles d'actualité similaires à celui-ci que nous avons collectés auprès d'autres sources d'information.

Next stock market crash: Investor returns face new, post-crisis threat - Business InsiderA quant expert warns the largest investors are facing a new, post-crisis danger that could lead to several years of losses — and explains how they can start limiting the damage ❤❤❤❤❤......
La source: BusinessInsider - 🏆 729. / 51 Lire la suite »

Stock market investing advice, book recommendations from Jim Rogers - Business InsiderJim Rogers, the investing guru who earned a 4,200% return with George Soros, told us everyone should read these 3 books that made a 'huge impression' on his career Insidertrading
La source: BusinessInsider - 🏆 729. / 51 Lire la suite »

College athletes could get big influencer brand deals: marketing execs - Business InsiderA new NCAA rule would allow college athletes to profit from endorsements, which opens doors for influencers deals that are still likely years away. Great!
La source: BusinessInsider - 🏆 729. / 51 Lire la suite »