John Boehner is the Republican speak of the House of Representatives, one of the two houses of the United States Congress, the other being the Senate. The House of Representatives is roughly evenly divided between Republicans and Democrats.
Sunday, 16 December 2012
Thursday, 6 December 2012
Shape of the Futures Curve
For the given commodity, as of December 2012, is the curve in contango, backwardation or BOTH (contango AND backwardation)?
WTI Crude Oil Futures: currently trading around $88 a barrel. (Each contract is for 1,000 barrels of crude, so notional value of 1 future is ...wait for it... $88,000). The minimum fluctuation is one cent per barrel. WTI is in CONTANGO out to December 2013 (a one-year contango) when it reaches about $91 and 40 or 50 cents (roughly $3.50 premium for oil in one year versus oil now). After Z13 it's all backwardated and the curve looks like an inverted quadratic function.
The natural follow-on question..what about Brent?
Brent Futures is around $108 a barrel and the curve is simple - PURE backwardation. One future here is also for a thousand barrels, so the notional of a Brent future is rougly $108,000 (or about 1.1x the value of the TI notional).
There are interesting contract differences between Brent and TI futures. For example, Brent futures come with the option to cash-settle, whereas the TI always results in physical delivery (delivered "Free-On-Board" at Cushing, Oklahoma). TI futures are traded on CME Globex. Brent can be traded on WebICE.
WTI Crude Oil Futures: currently trading around $88 a barrel. (Each contract is for 1,000 barrels of crude, so notional value of 1 future is ...wait for it... $88,000). The minimum fluctuation is one cent per barrel. WTI is in CONTANGO out to December 2013 (a one-year contango) when it reaches about $91 and 40 or 50 cents (roughly $3.50 premium for oil in one year versus oil now). After Z13 it's all backwardated and the curve looks like an inverted quadratic function.
The natural follow-on question..what about Brent?
Brent Futures is around $108 a barrel and the curve is simple - PURE backwardation. One future here is also for a thousand barrels, so the notional of a Brent future is rougly $108,000 (or about 1.1x the value of the TI notional).
There are interesting contract differences between Brent and TI futures. For example, Brent futures come with the option to cash-settle, whereas the TI always results in physical delivery (delivered "Free-On-Board" at Cushing, Oklahoma). TI futures are traded on CME Globex. Brent can be traded on WebICE.
Wednesday, 5 December 2012
George Osborne Extends Austerity Program
The UK Chancellor (tantamount to a Minister of Finance) George Osborne has extended Britain's "Austerity Program" through to 2018 with a series of cuts to government spending and stated "Britain is on the Right Track". What will be the likely impact on Fixed Income markets, specifically on UK debt?
If Britain's credit rating suffers (currently AAA), credit default swaps on UK debt will get more expensive.
As a historical note, the Exchequer, as used in the appellation "Chancellor of the Exchequer", was a government department responsible for collecting taxes and other income, a kind of "ancient" Inland Revenue service which collected revenues on behalf of the King.
David Cameron is the current leader of the Coalition government (made up of Conservatives and Liberal Democrats) that came to power in May 2010 following the resignation of Gordon Brown (the former Chancellor who "could not fail").
If Britain's credit rating suffers (currently AAA), credit default swaps on UK debt will get more expensive.
As a historical note, the Exchequer, as used in the appellation "Chancellor of the Exchequer", was a government department responsible for collecting taxes and other income, a kind of "ancient" Inland Revenue service which collected revenues on behalf of the King.
David Cameron is the current leader of the Coalition government (made up of Conservatives and Liberal Democrats) that came to power in May 2010 following the resignation of Gordon Brown (the former Chancellor who "could not fail").
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