• Skip to primary navigation
  • Skip to content
  • Skip to footer
Daniels Trading

Trade Futures, Spreads and Options with Confidence.

Top Navigation

  • Open a Futures Account
  • Sign Up
  • Log in
  • 1.800.800.3840

Primary Navigation Menu

  • About
    • Who We Are
    • Services
    • Risk Disclosure
    • COVID-19
  • Trade
    • Broker-Assisted
    • Self-Directed / Online
    • Request Pricing
  • Hedge
    • Ag Marketing Plan
    • WASDE Analysis
    • Grain Resources
    • Livestock / Dairy Resources
    • Request Pricing
  • Invest
    • Automated Strategies
    • Managed Futures
    • Request Pricing
  • Advisories
    • GENERAL / FUNDAMENTAL
      • DT Newsletter
      • Insider Market Advisory
      • Turner’s Take Newsletter & Podcast
    • TECHNICAL ANALYSIS
      • The Cullen Outlook
      • Data Feed Trade
      • Jarboe Trading Journal
      • Trade Spotlight
    • AG MARKETING
      • Cattleman’s Advisory
      • Technical Ag Knowledge
      • Turner’s Take Ag Marketing
    • THIRD-PARTY RESOURCES
      • CFRN
      • Moore Research Center, Inc. (MRCI)
      • OptionWorks®
      • TASMarketProfile.com
  • Education
    • CME Group Resource Center
    • CME Group Offers
    • Small Exchange Resources
    • Guides
    • Frequently Asked Questions
    • Order Entry Handbook
  • Blog
    • Futures 101
    • Ag Marketing
    • Tips & Strategies
    • Trading Advisories
  • Resources
    • Trading Software
    • Quotes and Charts
    • Futures Calendars
    • Contract Specifications
    • Margin Requirements
    • Futures Calculator
  • Accounts
    • Apply
    • Access My Account
    • Funding
  • Contact
 

Doomsday Indicator or Rare Opportunity?

May 7, 2021 by Frank Kaberna| Tips & Strategies

Talking heads can share many attributes whether they represent politics, finance, or sports. One mutual trait that’s been particularly relevant lately is overdramatizing events. “That team would NEVER draft that player,” fictional NFL commentator says minutes before said team drafts said player.

The Fed and interest rate analysts currently find themselves in a similar dance. After the US Federal Reserve announced no change in rates last week, many took to social media to hyperbolize and rant about how the Fed will never move rates off 0% and how this will cause an inevitable stock market crash.

The Same Old Song

Those who traded in the aftermath of 2008’s crash might be feeling some déjà vu these days relative to the will-they-or-won’t-they mentality with the Fed and hiking rates off 0%. As the equity market put in new high after new high, analysts and opinionated social media users alike projected that the Fed Funds Rate would never come off 0% again. And then the Fed hiked rates several times between 2015 and 2018.*

SPX \ S&P 500 Index

Source: dxFeed Index Services (https://indexit.dxfeed.com)

A New Way to Trade

Could rates stay near 0% for months and even years? Of course! Will they stay there forever? Though it’s possible, there is no historical precedent. Ever since the Fed’s inception, cutting rates has at some point been followed by hiking them. Small 2YR Yield futures currently reflect about 0.175% in short-term interest rates. Buying S2Y futures would demonstrate a potential reversion to the historical norm, while selling them contends the opposite.

Gain exposure to popular markets with standardized tick values and expiration dates on the Small Exchange. See why the smalls are making a big splash. >>

S2Y \ Small 2YR Yield Index

Source: dxFeed Index Services (https://indexit.dxfeed.com)

The Fed’s mission is not to burn down the house, as some talking heads might project, but rather to guide financial markets along in a way that usually has commentators saying, “Oh yeah, this must be the place.”

*Data from https://www.federalreserve.gov/

—
To learn more about how the Small Exchange is merging the efficiency of futures with the clarity of stocks, make sure to subscribe to their YouTube channel and follow them on Twitter so you never miss an update.

© 2021 Small Exchange, Inc. All rights reserved. Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information in this advertisement is current as of the date noted, is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading futures involves the risk of loss, including the possibility of loss greater than your initial investment.

New call-to-action

Filed Under: Tips & Strategies

About Frank Kaberna

Frank Kaberna is the head content strategist at the Small Exchange. He produces everything from brochures to videos that inform on the Small Exchange’s products. After earning a mathematics degree from the University of Michigan, Frank traded interest rates at the Chicago Board of Trade. He then worked on the tastytrade Network as a content producer and on-air talent before landing at the Small Exchange.

Subscribe To The Blog

Footer

Site Navigation

  • Frequently Asked Questions
  • About Us
  • Customer Reviews
  • Contact Us
  • Futures Blog
  • Open a Futures Trading Account
  • Media Resources
  • Fund Your Account
  • Legal Notices

Contact Us

StoneX Financial Inc.
Daniels Trading Division
230 South LaSalle Suite 10-500
Chicago, IL 60604
+1.312.706.7600 Local / Int'l
+1.800.800.3840 Toll-Free
+1.312.706.7605 Fax

Connect with Us

Trustpilot
Risk Disclosure
  • Risk Disclosure
  • Privacy Policy
  • California Residents Privacy Notice
  • Terms of Use
  • Back to top
 

Loading Comments...
 

You must be logged in to post a comment.