This has been a big year for the financial markets. A U.S./China trade war, faltering Bitcoin (BTC), and a resurgent U.S. dollar (USD) are just a few of the stories that have grabbed the attention of investors in 2018. Traders have certainly taken note of these developments. According to the Futures Industry Association (FIA), traded volumes of futures and options contracts grew by 19.7% year-over-year for the first half of 2018. Undoubtedly, these futures trading news items had a great deal to do with the spike in business.
The coming fall season is likely to bring even more action to the global derivatives markets. Traders and investors will have their eyes on several events poised to make headlines as 2018 comes to a close. Two news events in particular are positioned to shake up markets in coming months:
- The U.S. Congressional midterm elections
- SEC approval/disapproval of the first bitcoin exchange-traded fund
Although these two events aren’t the only factors that will move markets, they do address politics and the growing pains of the cryptocurrency asset class. Ultimately, billions of dollars will change hands in the trade of derivatives products sensitive to these issues.
U.S. Midterm Elections: End of the Trump Rally?
If you have been on the long side of the U.S equities markets, then the unprecedented growth of the past 24 months has been a welcomed sight. Strong U.S. GDP, low unemployment, and tax cut stimulus have driven both the Dow Jones Industrial Average (DJIA) and S&P 500 to all-time highs. Will the prosperity continue into 2019?
One futures trading news story that is going to heavily influence contracts such as the E-mini S&P 500 or E-mini DOW is the coming U.S. Congressional elections. Set to take place in November, the results may challenge the Trump rally in a few fundamental ways:
- Tax cut questions: Each side of the aisle has a dramatically different view of last December’s tax cut bill. Republicans have expressed an interest in deepening cuts, while some Democrats are calling for a rollback.
- Impeachment proceedings: There have been Democratic calls for impeachment proceedings to begin against President Trump. Should the Democrats regain the House of Representatives, these proceedings may become a reality.
- Precursor for 2020: The outcome of the 2018 midterm elections will be widely viewed as a barometer of President Trump’s popularity among the electorate. It will also be taken as a preview of the 2020 presidential election.
As of now, it’s difficult to determine whether the Republicans or Democrats will emerge victorious from the elections. No matter the outcome, there is likely to be an abundance of spin from each side. One thing is for sure — the markets are going to react, and futures traders will capitalize on the action.
Pending SEC Approval of a Bitcoin Exchange-Traded Fund
The rise of bitcoin (BTC) to prominence was the financial story of 2017. Values exploded, posting exponential gains and a high-water mark in the neighborhood of $20,000. Few assets in the history of finance have shown an equal degree of appreciation over a 12-month period.
Since the heights of late 2017, it has been a struggle for BTC and cryptocurrencies in general. By early September 2018, values plummeted to $6000, a massive loss from the lofty valuations of December 2017.
Albeit slow, the popularity and traded volumes of BTC futures listed on the CME and CBOE have experienced growth. One futures trading news story bound to drive public interest is the pending U.S. Securities Exchange Commission (SEC) approval of the first formal Bitcoin exchange-traded fund (ETF). Reviews of nine proposed funds are being conducted by the SEC, with approval or denial scheduled for fall/winter 2018.
Global investment titans the likes of BlackRock are showing interest in offering a Bitcoin ETF. Given SEC approval, the first Bitcoin ETF will further legitimize BTC, as well as the entire cryptocurrency asset class.
Market Fundamentals: Futures Trading News
Fundamental market drivers, such as elections and regulation, are capable of shaking up the financial landscape. As a general rule, uncertainty is bad for pricing stability. This fall may leave equities, currency, and cryptocurrency traders gasping for breath.
If you’re an active trader, staying abreast of breaking and scheduled futures trading news items is an important part of conducting business. To stay current, be sure to check out the dt Insider Market Advisory for the latest in all things futures.