Impact of Interest Rates on Futures Pricing: Key Factors Explained
Key Takeaways
- Interest rates, spot price, and storage costs increase futures prices, while dividend income and convenience yield decrease them.
- The futures price of a non-dividend and non-storable asset is influenced by the risk-free rate, spot price, and time to maturity.
- Rising interest rates generally lead to lower futures contract prices but can offer opportunities for anticipating traders.
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