Coronavirus: When China’s Markets Reopen, Prepare for Volatility
Shuli Ren – Bloomberg
7,000 or 40,000? 3% or 7%? As the Chinese hunker down for an extended Lunar New Year break, forced upon them by a raging epidemic, they’re turning to wild guessing games over two crucial figures: How many more will be infected by the SARS-like coronavirus, and how big a selloff we will see when the mainland market reopens Monday.
The market’s favorite recession signal is flashing red again as coronavirus fears rage
Ben Winck – Markets Insider
The US Treasury yield curve — one of the most closely watched recession indicators — briefly inverted on Tuesday for the first time since October.
The yield of the 10-year Treasury bond fell below that of the three-month bond as concerns about the coronavirus outbreak gripped markets around the world. Yield-curve inversions have preceded every US recession since 1950, though the gap between the two-year and 10-year Treasury bills is the most closely watched section of the indicator.
Turkish Lira (TRY) Hedging Costs Nosedive
Constantine Courcoulas – Bloomberg
It hasn’t been this cheap to hedge against losses in the Turkish lira in almost two years.
The premium traders pay for options to sell the local currency over those to buy it over a one-month period fell to 1.5 percentage points on Thursday, matching a low last seen in April 2018.
Trading liquidity tops FX market’s concerns in 2020 – survey
Saikat Chatterjee – Reuters
The ability to buy and sell foreign exchange whenever needed with minimal market impact is seen by currency traders as the biggest challenge for 2020, according to an annual client survey by JP Morgan published on Thursday.
In a year when broader market volatility has fallen to record lows thanks to abundant central bank liquidity in global markets, worries about the availability of market liquidity topped the list of issues facing FX traders for a second consecutive year in the U.S. bank’s annual survey.
Exchanges and Clearing
Decrease of Spot Month Position Limits of Four (4) Palladium Futures and Option Contracts
Effective at the close of trading February 27, 2020 for the March 2020 contract month and beyond, the New York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”) will decrease the spot month position limits and accountability levels for four (4) Palladium futures and option contracts from 50 to 25 futures contract equivalents as noted below and in Exhibit A & B of NYMEX Submission No 20-091. Please note that the spot month limits and accountability levels in the February 2020 contract month are unchanged.
CME Globex Notices: January 27, 2020
Regulation & Enforcement
US to set caps on commodities speculators
Gregory Meyer – Financial Times
Hedge funds and other speculative traders will escape strict curbs on commodities bets under proposed US market rules more than a decade in the making.
Federal position limits on raw materials such as oil and grain were mandated by the Dodd-Frank financial reform law of 2010. But the Commodity Futures Trading Commission’s first attempt to impose them was thrown out in court after two banking trade groups sued.
NOTICE OF DISCIPLINARY ACTION # NYMEX 18-0960-BC-1 Effective Date 30 January 2020 NON-MEMBER: GFI BROKERS LIMITED
EXCHANGE RULE: RULE 526. BLOCK TRADES The Exchange shall designate the products in which block trades shall be permitted and determine the minimum quantity thresholds for such transactions. The following shall govern block trades: F. Unless otherwise agreed to by the principal counterparties to the block trade, the seller, or, in the case of a brokered transaction, the broker handling the block trade, must ensure that each block trade is reported to the Exchange within the time period and in the manner specified by the Exchange. The report must include the contract, contract month, price, quantity of the transaction, the respective clearing members, the time of execution, and, for options, strike price, put or call and expiration month. The Exchange shall promptly publish such information separately from the reports of transactions in the regular market.
NOTICE OF DISCIPLINARY ACTION # NYMEX 17-0744-BC Effective Date 30 January 2020 NON-MEMBER: COQUEST INC.
NYMEX RULES: RULE 526. BLOCK TRADES The Exchange shall designate the products in which block trades shall be permitted and determine the minimum quantity thresholds for such transactions. The following shall govern block trades: F. Unless otherwise agreed to by the principal counterparties to the block trade, the seller, or, in the case of a brokered transaction, the broker handling the block trade, must ensure that each block trade is reported to the Exchange within the time period and in the manner specified by the Exchange. The report must include the contract, contract month, price, quantity of the transaction, the respective clearing members, the time of execution, and, for options, strike price, put or call and expiration month. The Exchange shall promptly publish such information separately from the reports of transactions in the regular market.
NOTICE OF DISCIPLINARY ACTION # NYMEX 17-0789-BC Effective Date 30 January 2020 MEMBER: Tanius Technology LLC
NYMEX RULE VIOLATIONS: Rule 432 General Offenses It shall be an offense: Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange; W. for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange;
Why investors should buy stock-market dips as coronavirus spreads — and dump equities as they rebound
Mark DeCambre – MarketWatch
Buy, sell and repeat. That’s the strategy that strategists at Bank of America Securities appears to be espousing for investors, amid swings in U.S. stock benchmarks that have become increasingly gut-wrenching in the aftermath of a coronavirus outbreak in China that appears to be giving bullish investors at least a momentary pause after a record-setting rally.
Learning How to Learn
Matt Hensley – YouCanTrade
For many of us, learning how to trade may be the first truly new skill or concept we’ve learned in many years. After school and moving into a career, we usually don’t have time to spare for new endeavors outside of the occasional hobby. Adding trading as a second career or “side-hustle” requires us to go back to school in a lot of ways. Setting foot in the live trading rooms or taking one of our courses can feel like being back in a classroom, and, it requires us to re-engage the learning areas of our brain. And, while we all learn at different speeds and in different ways, there are some basic concepts to help us learn the information we need as efficiently as possible. The following strategies apply specifically to our video courses, but the concepts translate well into our live trading rooms as well.
Banks and fund managers want trial of shorter European trading day
Huw Jones – Reuters
Banks and asset managers called on Thursday for a one-year trial of a shorter trading day for European stock exchanges to make markets more efficient, lift volumes and attract more women. The Association for Financial Markets in Europe (AFME) banking lobby and the Investment Association (IA), which represent asset managers, said in a statement the London Stock Exchange trading day should be cut by 90 minutes to seven hours. They proposed two options, for the day to run between 0900 and 1600 UK time, or from 0930 to 1630 UK time.