Rally or Mirage? Making Sense of the Nonsense.

December 10, 2023

I’m calling on all curious minds to delve with me into the enigmatic actions of central banks in the global markets. Let’s explore together the hidden mechanisms that may be driving our financial world in ways you never imagined.

Welcome back to this week’s edition of Finance University.

Recently, I stumbled upon an intriguing and somewhat alarming aspect of our financial markets that I felt compelled to share with you. It was about the fact that foreign central banks are such great customers of the Chicago Mercantile Exchange that they get very special high-volume discount pricing. Hmmmm. What are they doing there at all, let alone in high volumes? Why do no central banks report any CME products on their balance sheets?

Inquiring minds would like to know.

Now, let’s try to make sense of this. The central banks, traditionally silent market spectators, seem to have preferred buyer programs, a fact not widely known or discussed. But why?