The highest volume futures and options contracts are not the traditional physical commodities; they are financial futures. After all, money is the ultimate commodity.
Financial futures can be broken down into three basic sections: interest rates, stock indices, and currencies. Many of the fundamentals that affect one group affect the others. Obviously, interest rates affect stock prices and currency valuations. In fact, interest rates are perhaps the most important fundamental capable of moving stock markets and currencies.
Governments allow interest rate futures to exist so that hedgers can neutralize or shift some of their price risks. A mortgage banker can transfer his price risk to a speculator, just as a ...