CME Hikes Turkish Lira, Nat Gas Margins

Tyler Durden's picture


Once upon a time, the only CME margin hike releases the investing population cared about were those for gold (because no matter how high the E-Mini went, the CME never seemed too bothered). Now, the CME has more "important" things to worry about - such as preventing the "heating bill shock" that will come in February when the majority of the population opens their electricity and heating statements for January (sorry, there goes the discretionary retail spending cash). And of course, the ongoing deterioration of the emerging markets, in this case led by Turkey and the absolute collapse in the Turkish Lira. Which is why about an hour ago, the CME decided to hike both TRY (to both the USD and EUR) and Nat Gas margins, by 14 and 20% respectively. Will this normalize some of the vol seen around these products on Monday remains to be seen. Oh well, if not - the CME can just hike some more the same day, until it gets the desired outcome.


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Fri, 01/24/2014 - 20:01 | 4364910 HedgeAccordingly
HedgeAccordingly's picture

A look at the natural gas future chart 15 years |

Fri, 01/24/2014 - 20:47 | 4365049 NotApplicable
NotApplicable's picture

I just opened my largest electric bill ever. Gotta up my chainsaw time.

Fri, 01/24/2014 - 21:20 | 4365141 Theos
Theos's picture

Coal is being forced out.

Everyone hates nuclear.

No one uses oil.

Renewables are a joke.


Want electricity? Go grovel in front of the natural gas power plants.


Did I mention everyone hates pipelines too? 



Fri, 01/24/2014 - 22:03 | 4365271 0b1knob
0b1knob's picture

Nat. gas about to go WAY up.   Everybody who bought the cheap spot gas suddenly wakes up and realizes the need/want long term contracts.   LNG terminals coming on line soon.

Invest according.

Fri, 01/24/2014 - 20:18 | 4364967 larry david
larry david's picture

I went long USD/try just before 4pm...


Tyler's or anyone else care to speculate the effect this will have? Its intended to reduce speculation I assume and drive the lira higher?

Fri, 01/24/2014 - 20:19 | 4364969 presk_eel_pundit
presk_eel_pundit's picture

This will get even worse once the EPA outlaws coal-fired power plants.

Fri, 01/24/2014 - 20:35 | 4365023 NoDebt
NoDebt's picture

If you tell anyone I up-voted you I'll report you to the authorities.  Coal is the new "black death" under this administration.  Funny how nat gas experienced its boom right as that happened.  Funny.

Fri, 01/24/2014 - 21:16 | 4365121 Urban Redneck
Urban Redneck's picture

The EPA is also trying to outlaw coal-fired stoves and heaters (that actually work), so if you want the option, speak now (or before 12/31) or forever hold your peace...

Fri, 01/24/2014 - 20:40 | 4365016 NoDebt
NoDebt's picture

The phrase "playing in the margins" takes on new meaning.  The CME doesn't care what happens with the Turkish Lira or NatGas prices (nor how it affects anyone).  They are pulling back so they get their margin calls SOONER rather than later, and before anyone who's margined to the hilt the wrong way in these trades goes completely tits-up.  

Could we please, in the future, dispense with the fiction that the CME is doing any "societal good" or anything for reasons of "market calming" in any of it's decisions?  They never have, they never will.  They change the rules when it suits THEIR interests, no the interests of other parties.  We all cool with that understanding?


Fri, 01/24/2014 - 20:50 | 4365054 NotApplicable
NotApplicable's picture

What's really sad is that this has to be said at all. Self-interest is the most natural thing going.

Fri, 01/24/2014 - 20:42 | 4365040 seek
seek's picture

If gold keeps heading up, I predict a margin increase in that, too, within a few weeks.

Fri, 01/24/2014 - 20:51 | 4365053 adr
adr's picture

Who would of thought it would be cold in winter. I think there is a thing called natural gas stockpiles because of things like this. Even with the cold weather nat gas stockpiles are still above average. There really isn't a good reason for the move from $4 to $5 in a little over a week. By the end of February the country will start to warm up and the demand for nat gas will subside. Normally that would mean prices would fall, but this is the speculator's market where real end demand doesn't factor into the price, only demand for the contract one can flip.

Does everything need to follow the greater fool theory?

Fri, 01/24/2014 - 21:15 | 4365116 Theos
Theos's picture

The issue is transportation. Consider NYC city gate trading at 120$ this week:


Storage levels are well below long term lows:


Next week is gonig to be one of the biggest withdrawls ever.

Fri, 01/24/2014 - 22:32 | 4365359 Vint Slugs
Vint Slugs's picture

Just curious - who at ZH is responsible for writing asinine articles as above with remarks such as, "Now, the CME has more 'important' things to worry about - such as preventing the 'heating bill shock'"?  The CME has no significant stake in whether or not prices go to the moon and the CME does not regulate prices in the physical marketplace.

Historic evidence shows that margin rate hikes have  no effect on either price levels or volatility.  I've commented here before that margin hikes are not implemented by a commodity exchange in an attempt to control prices but that observation appears not to affect dimwits who have no practical understanding of exchange mechanics.

Sat, 01/25/2014 - 04:43 | 4366014 e-recep
e-recep's picture

It looks like the serial down-voter was here, what an asshole.

Sat, 01/25/2014 - 04:47 | 4366019 godzila
godzila's picture

Quite frankly I don't see what the problem is here. As much as i have have some griefs with the CME I would say that this decision is sensible and resonable.

Anyone care to eleaborate ?

Sat, 01/25/2014 - 05:46 | 4366057 shawnmike
shawnmike's picture

Meanwhile the controlled sell-off in US equities is just that, completely controlled, and ready for the late day ramp. All while they go mad for bonds. Whatever, don't think anyone's jumping from windows on Wall Street just yet visit site:leather jackets -

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