CME Group Earnings Suffer Due to Dull Bond Market
The year 2020 has been difficult for financial stocks. The banks have had to take huge provisions for potential credit losses, while the real estate investment trust (REIT) sector has been beset with struggling tenants. One of the few bright spots in the financial space has been the exchanges, since they generally take very little credit risk. That said, not all exchanges have performed this year. CME Group (NASDAQ: CME) has struggled as the Fed's actions have affected its bottom line.
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CME Group is a collection of exchanges that focus primarily on financial derivates -- that is, contracts based on the underlying value of another asset. CME's exchanges include the Chicago Mercantile Exchange, the Chicago Board of Trade, the Commodity Exchange, and the New York Mercantile Exchange. The company's primary asset class is interest rate derivatives, which accounted for 54% of its average daily volume in 2019. Interest rate derivatives include Eurodollar and LIBOR (London Interbank Offered Rate) contracts, and Treasury futures and options. The second-biggest chunk of volume comes from equity index futures (S&P 500, Nasdaq, etc.), and the third is from energy.
Source Fool.com
