NIBA - Celebrating 35 Years

NIBA Journal

Insights, analysis, and updates from the National Introducing Brokers Association

Active filters:
Category: CME Updates×
Clear all
CME Updates
4 min read

Do Oil Prices Really Predict Gasoline Prices?

With the commencement of a new round of OPEC + Russia crude oil production cuts on January 1, many people are worried about a sudden and crippling rise in the price of gasoline at the pump. The relationship between oil prices and gasoline prices is notoriously hard to track. WTI crude oil prices fell from the high of $76.90 reached on October 3, 2018 to the recent low of $42.36 on December 24, a 45 percent drop. Gasoline prices, however, fell only 17.3 percent in that same time period. According to the Energy Information Administration (EIA), regular retail gasoline price averages dropped from $2.86 per gallon to $2.366 per gallon from the beginning of October to the end of December. Clearly the price of gasoline is not exactly correlated to the price of crude oil especially when price is falling quickly over a short span of time. So what is...

By NIBARead article
CME Updates
3 min read

Is There A Gold/Bitcoin Correlation?

On November 14, 2018, CME bitcoin futures broke through the important $6,000 support level and lost more than 40 percent of their value in the next 12 days. On that same day gold futures accelerated off their lows and began an explosive 9 percent rally higher. Macro traders and analysts love dependable correlations between asset classes. The desire to spot a corollary trend is so great that maybe, just occasionally, some of us project a relationship before we have the real data to back it up. So gold and bitcoin started significant moves at the same time in opposing directions. Is that a big deal? Before we answer that question we have to figure out what bitcoin and gold actually are. Or, more appropriately, WHY they are. Analog and Digital Currency Protection Most of the bitcoin/crypto currency fanatics I know argue that bitcoin is an alternative currency that’s free of...

By NIBARead article
CME Updates
4 min read

Why Key Gold and Silver ETFs Are Focusing on Futures

In January, ProShares changed its silver and gold ETFs to track futures-based indexes. This marks the first time leveraged and inverse ETFs will benchmark to gold and silver futures prices. Our silver and gold ETFs (AGQ, ZSL, UGL and GLL) are changing their benchmarks from the LBMA (London Bullion Market Association) silver and gold auction prices to Bloomberg Commodity Subindexes. So how did we get here? A number of factors drove us to change the way we obtain exposure for our silver and gold ETFs, but understanding the gold and silver exchange-traded product (ETP) landscape is an important starting point. Pricing for Physical Gold and Silver Among the $60 billion in overall silver and gold ETPs, about 98 percent of the assets are in funds that hold physical commodities, including the well-known SPDR Gold Shares ETF (GLD) and iShares Silver Trust ETF (SLV). Funds that hold and transact in physical...

By NIBARead article
CME Updates
4 min read

How Rate Changes Could Affect Consumers

The strong job market, low unemployment rate and rising wages are all good signs for the economy, but have posed a rising risk of inflation. To offset this inflation risk, the Federal Reserve has gradually raised interest rates, which has the eventual effect of slowing the economy. This continued rise in interest rates over the last two years has been both good and bad news for consumers. If you are a saver it has been positive; if you’re a borrower it has been painful. The increase in rates affects mortgages, credit cards, home equity loans and car payments to mention just a few, thereby affecting the disposable income of consumers. Costs to Homeowners Homeowners with fixed-rate mortgages are unaffected by a raise in rates but an increase in rates leads to rising interest payments on variable mortgages. For example, a half percent rise in rates on a $100,000 mortgage translates...

By NIBARead article
CME Updates
4 min read

Will Gold Rebound in 2019?

Frankincense and myrrh may no longer be traditional Christmas gifts, but the appeal of gold endures. For investors, however, the yellow metal lost a little of its luster in 2018. In late December, the gold price was down 4.5 percent ($1,255 per ounce). It had also suffered the indignity of being surpassed by palladium as the most valuable precious metal, something that last happened in 2002 when gold languished at levels around $450/oz. Gold and Real Yields Gold faced three main headwinds in 2018: rising (real) interest rates; a strong U.S. dollar; and, until recently, relatively low levels of equity market volatility. There are sound reasons to believe that these factors are evolving into tailwinds. Real yields are the difference between cash yields on bonds and the (forward) inflation rate. Real yields have been rising for most of the year and in October the U.S. 10-year real yield rose above...

By NIBARead article
CME Updates
4 min read

Three Currencies to Watch in 2019

2018 was a phenomenal year for the U.S. dollar as the trade weighted Dollar Index rose more than 9 percent from its low in February. This strength drove all of the major currencies lower from the euro to the Japanese yen and Australian dollar. Nothing mattered more than the market’s appetite for U.S. dollars in 2018. It determined where all of the major currencies were headed and had a significant impact on commodities. That influence on the market won’t change in the year ahead which is why the outlook for the dollar trumps all else. As we begin 2019, here are three currencies to watch: U.S. Dollar The good times are over for the dollar. The trend for the greenback shifted in 2018 when equities collapsed and the economy began to slow. Unfortunately there are no shortages of risks for the U.S. economy in the year ahead. Volatility is rising,...

By NIBARead article
Page 4