I just posted a month-end recap for December. (I was traveling for the last week of the year and took two days to get back up to speed in the markets). You can find the recap here, or check in the Resources page on the website.
Key highlights include:
–The report uses Jan 4 prices for my “year-end” quotes.
–During December, 14 lots traded across 10 regions and 2 expirations. (Only MIA didn’t see any trades). YTD volume of 166 was the second highest in eight years (but still way below target).
–The month was unusual in that only 1 of the 14 trades was in a 10-city contract. By comparison, 30% of the trades done in 2021 were in the HCI/CUS10-city contracts. In addition, 11 lots traded while I was away.
–Prices were mixed by region (i.e.4 regions were up/ 4 were lower).
–Forward curves were slightly flatter (as in implied HPA for 2022 dropped by < 0.5% to 2.0/3.6%, per calendar spread quotes).
–Trading remains concentrated in the front contracts as all but one trade was in G22 contract. As such, the average time to expiration of open contracts dropped to 0.45 years. That said, there have been a number of inquiries for X22 and G23 expirations and I hope to see trades when bid/ask spreads compress.
–I’m getting a growing number of inquiries for puts and sense an opportunity for good volume. Stay tuned to updates to the Options Page for new quotes, trading ideas.
-Similarly I had some inquires for non-CME cities before the holidays, and expect to be posting some ideas on other cities in the next week.
Please feel free to contact me if you have any questions related to this post, have trading ideas that you'd like to discuss, or if you'd just like to learn more about using home price index derivatives in hedging strategies.
Best wishes for a healthy, happy New Year!
John