Corn Micro Jul '26 (CEN26)

Description

Interest rate futures contracts are widely traded worldwide. The most popular futures contracts are 10-year government bonds and 3-month interest rate contracts. In Europe, futures on German interest rates are traded at the Eurex Exchange. Futures on UK interest rates are traded at the ICE Futures Europe exchange in London. Futures on Canadian interest rates are traded at the Montreal Exchange. Futures on Japanese interest rates are traded at the Singapore Exchange (SGX) and at the Tokyo Stock Exchange. A variety of other interest rate futures contracts are traded worldwide.

Eurozone - The Eurex German 10-year Euro Bund futures contract (Barchart.com symbol GG) moved sideways to lower during 2025 and closed the year down -5.87 points at 127.57. The Eurex French 10-year OAT bond futures contract (Barchart.com symbol FN) also moved lower during 2025 and closed the year down -2.81 points at 120.59. However, the Eurex Italy Euro BTP 10-year bond futures contract (Barchart.com symbol II) moved slightly higher in 2025 and closed the year up by +0.20 points at 120.18.

European 10-year bond prices retreated in Q1 of 2025. They fell to a 2-year low in March as the 10-year German Bund yield climbed to a 2-year high of 2.94%. Concerns over rising fiscal deficits weighed on bond prices when German chancellor-in-waiting Merz said Germany would amend its constitution to exempt defense spending. Bond prices fell despite the European Central Bank (ECB) cutting interest rates by -25 bp at its March meeting, when it said rates were "becoming meaningfully less restrictive," bolstering speculation that the ECB may be close to ending its rate-cutting cycle.

European bond prices stabilized and rallied into June, and the 10-year German Bund yield fell by more than -50 bp from its 2-year high in March as the ECB continued cutting interest rates. The ECB cut rates by -25 bp at the April and June meetings, bringing the total easing in 2025 to -100 bp. However, bond prices weakened for the remainder of the year, after ECB President Lagarde said in June that it was nearing the end of its rate-cutting cycle following the June rate cut.

Sticky inflation pressures in the Eurozone pressured bond prices in Q3 after the Eurozone's Aug core CPI rose +2.3% yr/yr, stronger than expected and above the ECB's 2.0% target, prompting ECB Executive Board member Schnabel to say that the ECB should maintain borrowing costs at current levels with inflation risks tilted to the upside.

European bond prices remained under pressure for the remainder of the year as the ongoing war in Ukraine in 2025 prompted European countries to boost defense spending, thereby widening fiscal deficits. Also, strength in the Eurozone economy was negative for bond prices as ECB President Lagarde said in December that the Eurozone economy has been "resilient," as the ECB at its December meeting raised its 2025 Eurozone GDP forecast to +1.4% from a prior forecast of +1.2% and kept its 2025 inflation ex-food and energy forecast unchanged at +2.4%, above the ECB's 2.0% target.

UK - The ICE UK 10-year gilt government bond futures contract (Barchart.com symbol G) traded sideways to lower in 2025 and finished the year down by -1.04 points. Gilt prices sank to a 17-year low in January, and the 10-year UK gilt yield climbed to a 17-year high of 4.92%. Gilt yields surged in early 2025 amid weak growth and sticky price pressures, sparking fears of stagflation. Gilt prices stabilized into Q2 after UK consumer prices eased to 2.6% yr/yr in March from 3.0% yr/yr in January, allowing the Bank of England (BOE) to cut interest rates. Also, weakness in the UK economy allowed the BOE to keep cutting interest rates after the UK's March S&P manufacturing PMI fell to 44.9, the weakest reading in two years. The BOE cut the benchmark rate by -25 bp at the February meeting and by another -25 bp at the May policy meeting. However, gilt prices fell back and remained under pressure into Q3 as rising prices weighed on gilts after UK consumer prices rose to a 2-year high of +3.8% yr/yr in July and stayed there through September. Consumer prices then eased into the end of the year, allowing the BOE to cut interest rates by -25 bp at the August meeting and by another -25 bp at the December meeting.

Canada - The Montreal Exchange's Canadian 10-year government note futures contract (Barchart.com symbol CG) traded sideways to lower in 2025 and finished the year down by -1.70 points. Canadian 10-year government note futures rallied to a 2-year high in April as labor market weakness prompted the Bank of Canada (BOC) to cut interest rates. The BOC cut the benchmark rate by -25 bp at the January and March meetings after employment unexpectedly fell by -32,600 in March. Inflation pressures also receded as the June CPI eased to +1.3% yr/yr, the weakest report in two years. In addition, the labor market deteriorated further, with the unemployment rate rising to a 4-year high of 7.1% in August. The slowing inflation pressures, along with labor market weakness, allowed the BOC to cut rates by -25 bp at the September meeting to 2.50%. However, bond prices retreated into year-end as the economy strengthened, with Canada's Q3 GDP expanding at a stronger-than-expected +2.6% (q/q annualized) pace, prompting the BOC to keep interest rates steady at the December meeting.

Japan - The SGX Japan 10-year Japanese government bond (JGB) futures contract (Barchart.com symbol JX) tumbled in Q1 of 2025 as the Bank of Japan (BOJ) raised its policy rate by +25 bp to 0.50%, its first increase since July of 2024, and said risks to prices were skewed to the upside. The Japan national CPI rose to a 3-year high of +4.0% in January, knocking bond prices down dto a 17-year low in March. Bond prices briefly rose in April, hitting a high for the year at 142.93, as President Trump's new reciprocal tariffs prompted BOJ Governor Ueda to say the BOJ might not implement expected interest rate hikes due to US tariffs. However, bond prices then resumed their decline for the rest of the year. In June, the BOJ announced it would begin slowing its monthly government bond purchases, effectively tightening monetary policy. Bond prices also fell after Japan's Liberal Democratic Party lost its majority in the upper house in the July 20 elections, fueling concerns about fiscal deterioration in Japan's government finances. The BOJ in December raised its policy rate by +25 bp to 0.75% and said it would keep raising rates if conditions allowed. 10-year Japanese bond prices sank to a 26-year low in December and finished 2025 down by -9.89 points at 132.25.

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