Sunday, April 18, 2010
CME & NFDM
(click on images to enlarge)
Some feel the CME has nothing to do with NFDM pricing. So, let me put out my thoughts on this.
As can be seen in the above graphs, the CME and other NFDM are highly correlated (.99) on an annual basis.
The next question is does CME follow or lead. As can be seen in the second graph, CME appears to lead.
The interesting part is how little NFDM is actually traded on the CME. In 2008 CME trades accounted for 4/100th of a percent of domestic NFDM.
CME only gets paid for actual trades and yet from 1998 through the third week in May 2008, only one load was traded. If the CME rouse was ineffective, the so-called trading would end very abruptly.
Some is getting a bang for their buck with NFDM on the CME.