Observations & Insight
The Spread: Oil Tanks
This week on The Spread, oil markets go contango, Quantitative Brokers releases a timely futures and options trading algorithm, FIA cancels more events, and more.
UK considers error range for GDP data due to COVID uncertainty
David Milliken – Reuters
Economic output figures could soon come with error ranges around them, to better capture uncertainty around an historic slump that is expected to follow Britain’s coronavirus shutdown, statisticians said on Monday. British gross domestic product figures were significantly revised during and after the 2008-09 financial crisis, and budget forecasters have already said this year’s plunge in the economy could be even bigger.
How Will the Fed Deal With Its Latest Dilemma?
Mohamed A. El-Erian – Bloomberg
Among the three systemically important central banks holding policy meetings this week — the Bank of Japan, the European Central Bank and the Federal Reserve — the Fed is least likely to announce new policy measures. Yet its assessment of the economic outlook and, more important, its guidance on future policy measures will go a long way in determining the performance of financial markets.
Funds’ bearish corn bets hit seven-month high as futures flirt with $3 mark
Karen Braun – Reuters
Speculators increased their pessimism toward Chicago-traded corn last week as unprecedented disruptions in demand had front-month futures dangerously close to a sub $3-per-bushel price, which has not happened since 2009. In the week ended April 21, hedge funds and other money managers expanded their net short position in CBOT corn futures and options to 161,057 contracts from 137,571 in the previous week, according to data from the U.S. Commodity Futures Trading Commission.
Hedge funds get bullish on WTI despite storage fears
John Kemp – Reuters
Hedge funds were heavy buyers of petroleum last week, purchasing a record amount of WTI, as managers interpreted battered and even negative crude prices as an opportunity to position themselves for a future rally. Hedge funds and other money managers purchased the equivalent of 122 million barrels in the six most important futures and options contracts in the week to April 21, the largest one-week increase since before Christmas.
Bitcoin Futures hog the limelight, but Options could be the next big thing
Biraajmaan Tamuly – AMB Crypto
According to TokenInsight’s latest derivatives exchange report, the Futures market recorded the highest growth in trading volume across the digital asset ecosystem. That’s not all, however. The report went on to note that spot market trading volume was responsible for 50.92 percent of the market in Q1 of 2020, with Futures accommodating 39.08 percent of the total derivatives volume. It further highlighted that by the end of 2020, Futures trading volume would take over spot volumes and its trading volume would have doubled before the start of 2021.
Regulation & Enforcement
U.K. Market-Abuse Reports Rise as Virus Poses Another Threat
Gaspard Sebag – Bloomberg
Market manipulation is still on the rise in the U.K. even after a decade of crackdowns on schemes to rig foreign-exchange rates and other key benchmarks. And the coronavirus pandemic could make things worse.
Reports of suspected market manipulation made to the Financial Conduct Authority have increased by 23% since 2017, with a sharp jump in 2018 followed by a slight increase last year to 822 notifications, according to a study by London law firm RPC.
How Goldman’s vampire squid gave way to BlackRock
Patrick Jenkins – Financial Times
Does the world have a new vampire squid? Ten years ago, that was how Rolling Stone magazine famously described Goldman Sachs, reflecting the way the bank was “wrapped around the face of humanity”.
For years the label stuck. Goldman’s grip on global finance, through its own commercial operations and the influence of its alumni, seemed unshakeable. But as banking has changed, so the prestige of the Wall Street giant has declined.