osoab
17th December 2010, 08:43 AM
CME Hikes Margins Across The Board: Copper, Palladium, Silver, And, Oddly, IR Swaps, Treasurys And Fed Funds (http://www.zerohedge.com/article/cme-hikes-margins-across-board-copper-palladium-silver-and-oddly-ir-swaps-treasurys-and-fed-)
As Zero Hedge had been claiming for about two weeks now, with volatility in stocks virtually gone due to the fact that nobody trades a market that is nothing more than a policy tool, those chasing vol have had to shift elsewhere, namely FX (the vertigo-inducing EURUSD is one example) and, surprisingly, treasuries. As we speculated, the fact that the world's most "liquid" market can experience 6 sigma shifts in the 2s5s10s butterfly in the span of days (more on that later), is indicative of something very bad developing under the surface. We have a feeling that should stocks continue to be shunned as they have been, and as the MOVE index continues to creep higher, the likelihood of some major wipe out is imminent. It seems that the CME has finally agreed with our line of thinking. Late last night, the CME hiked its margin requirements across pretty much all asset classes. The different options and futures involved in this drastic action were everything from natty, to copper (cough Blythe cough), to palladium, to silver. But most notably the CME both new initial and new maintenance margins on 5,7, 10 and 30 Year IR Swaps, 5,7, 10 and 30 Year Bond Futs, and, of all thing, the 30 Day Fed Fund Futures. If it has gotten so bad that the exchange has to regulate the vol in Fed Funds (the indicator of future inflation), then certainly one or more wheels are about to fall off. As to whether this action will have its typical impact of warding of shorting is unclear. We believe it will merely make fails to delivery increase substantially.
From the full release by the CME (http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv10-507.pdf):
The silver margin icrease.
Current Current New New
Initial Maintenance Maintenance Initial
COMEX 5000 SILVER FUTURES (SI)
SI Spec Tier 1 Increase USD 9,788 7,250 10,463 7,750
SI Hedge/Member Tier 1 Increase USD 7,250 7,250 7,750 7,750
SI Spec Tier 2 Increase USD 9,788 7,250 10,463 7,750
SI Hedge/Member Tier 2 Increase USD 7,250 7,250 7,750 7,750
SI Spec Tier 3 Increase USD 9,788 7,250 10,463 7,750
SI Hedge/Member Tier 3 Increase USD 7,250 7,250 7,750 7,750
COMEX 5000 SILVER TRADE AT SETTLE (SIT)
SIT Spec Tier 1 Increase USD 9,788 7,250 10,463 7,750
SIT Hedge/Member Tier 1 Increase USD 7,250 7,250 7,750 7,750
SIT Spec Tier 2 Increase USD 9,788 7,250 10,463 7,750
SIT Hedge/Member Tier 2 Increase USD 7,250 7,250 7,750 7,750
SIT Spec Tier 3 Increase USD 9,788 7,250 10,463 7,750
SIT Hedge/Member Tier 3 Increase USD 7,250 7,250 7,750 7,750
I am surprised @ the resilience in silver this morning with this news. Would this cause of yesterday's lagging? I really never caught anything to explain yesterday's weakness in the metals.
As Zero Hedge had been claiming for about two weeks now, with volatility in stocks virtually gone due to the fact that nobody trades a market that is nothing more than a policy tool, those chasing vol have had to shift elsewhere, namely FX (the vertigo-inducing EURUSD is one example) and, surprisingly, treasuries. As we speculated, the fact that the world's most "liquid" market can experience 6 sigma shifts in the 2s5s10s butterfly in the span of days (more on that later), is indicative of something very bad developing under the surface. We have a feeling that should stocks continue to be shunned as they have been, and as the MOVE index continues to creep higher, the likelihood of some major wipe out is imminent. It seems that the CME has finally agreed with our line of thinking. Late last night, the CME hiked its margin requirements across pretty much all asset classes. The different options and futures involved in this drastic action were everything from natty, to copper (cough Blythe cough), to palladium, to silver. But most notably the CME both new initial and new maintenance margins on 5,7, 10 and 30 Year IR Swaps, 5,7, 10 and 30 Year Bond Futs, and, of all thing, the 30 Day Fed Fund Futures. If it has gotten so bad that the exchange has to regulate the vol in Fed Funds (the indicator of future inflation), then certainly one or more wheels are about to fall off. As to whether this action will have its typical impact of warding of shorting is unclear. We believe it will merely make fails to delivery increase substantially.
From the full release by the CME (http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv10-507.pdf):
The silver margin icrease.
Current Current New New
Initial Maintenance Maintenance Initial
COMEX 5000 SILVER FUTURES (SI)
SI Spec Tier 1 Increase USD 9,788 7,250 10,463 7,750
SI Hedge/Member Tier 1 Increase USD 7,250 7,250 7,750 7,750
SI Spec Tier 2 Increase USD 9,788 7,250 10,463 7,750
SI Hedge/Member Tier 2 Increase USD 7,250 7,250 7,750 7,750
SI Spec Tier 3 Increase USD 9,788 7,250 10,463 7,750
SI Hedge/Member Tier 3 Increase USD 7,250 7,250 7,750 7,750
COMEX 5000 SILVER TRADE AT SETTLE (SIT)
SIT Spec Tier 1 Increase USD 9,788 7,250 10,463 7,750
SIT Hedge/Member Tier 1 Increase USD 7,250 7,250 7,750 7,750
SIT Spec Tier 2 Increase USD 9,788 7,250 10,463 7,750
SIT Hedge/Member Tier 2 Increase USD 7,250 7,250 7,750 7,750
SIT Spec Tier 3 Increase USD 9,788 7,250 10,463 7,750
SIT Hedge/Member Tier 3 Increase USD 7,250 7,250 7,750 7,750
I am surprised @ the resilience in silver this morning with this news. Would this cause of yesterday's lagging? I really never caught anything to explain yesterday's weakness in the metals.