The CME has been busy the past few months "adjusting" margins. I emphasize adjusting because I suspect it is not in the interest of protecting the speculator from financial ruin or ensuring true price discovery by removing excess speculation.

On Friday evening the CME lowered margin requirements on US Treasuries. Interestingly they only lowered the five year maturity and beyond. The short end of the curve is not changed. Most recently they lowered margins on index futures, about four weeks ago raised margins on crude and about six weeks ago raised margins on silver.

This all fits an interesting pattern in an attempt to control where investors put their money. As soon as silver and oil began falling many in the media began calling the Fed a hero as prices in fact appeared "transitory." Lower gas prices albeit pennies was and still is being argued a reason why the consumer will rebound from their recent slump.

As QE draws to an end the lower margins on bonds, primarily the belly and longer end of the curve will encourage investors to bid up treasuries while the Fed switches from daily to QE to QE lite where interest and prepaid securities are reinvested. The lower margins on futures also ensures two things (1) reduces margin calls should markets turn lower thus reducing the affects of the end of QE on equity markets and (2) helps keep a bid in equity markets as fewer investors using greater margin can make up for those leaving.

The sad reality of the capital markets is nothing happens by chance and very little (I'm being generous) is in the interest of protecting the retail investor. It appears the CME is preparing for a short term bond rally and equity slump.