CME Group Averaged a Record 27 Million Contracts a Day in July. Here's Why an Unsettled Fed Is Its Best Customer.
Key Points
CME Group had the highest July ADV ever last month.
Debate and dissension about the path of rates is likely a major catalyst.
CME tends to thrive when markets are volatile and unpredictable.
Leading derivatives trading marketplace CME Group (NASDAQ: CME) has had some of its most active months ever this summer. In June, it reported an average daily volume (ADV) of 30.6 million. That capped off its second-best second quarter ever, with an ADV of 29.8 million contracts.
That momentum has continued, as CME recorded its highest July average daily volume (ADV) on record, at 27 million contracts, up 23% from July 2025.
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There is one constant in both June and July that likely pushed volume higher: Both months featured Federal Open Market Committee (FOMC) meetings. And at both the June and July FOMC meetings, there was considerable uncertainty from the Federal Reserve about the future path of interest rates.
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In June, the Fed voted 12-0 to hold rates steady. Still, the quarterly summary of projections indicated that the committee majority anticipates one rate hike by the end of 2026, bringing rates back up to 3.8%. Currently, they are in the 3.50%-3.75% range.
Then, at the July meeting, the Fed again voted not to change rates, but the vote was 9-3, with three members favoring a rate hike. It speaks to the growing unease about rates.
A record first half for CME
Why is this good for CME? The company generates most of its revenue through transaction and clearing fees, so when ADV is higher, there are more transactions and thus, more fee income.
In the first half of 2026, CME saw record trading in Q1 and the second-highest Q2 totals ever. That led to record first-half 2026 revenue, adjusted operating income, adjusted net income, and adjusted earnings per share. This can be attributed to the overall volatility and uncertainty that we've seen in the markets in the first half of the year.
In the first quarter, rising inflation, weak economic data, the war in Iran, and rising oil prices caused markets to tank. Investors reallocated their portfolios, moving to the safety of interest-rate products and other stable investments. The second quarter featured a huge bounce-back rally as investors piled back into stocks, driving a lot of trading volume.
However, inflation has remained high, and macroeconomic concerns persist. As a result, sentiment on rates has flipped from an almost certain cut at the start of the year to the likelihood of a hike now.
Volatility and Fed indecision are good for CME
The Fed's changing view on rates has created additional volatility, not just among interest rate products but also stocks. In July, the ADV for interest rate products was 12.6 million, up 17% year over year. June also saw a 17% increase in ADV for interest rate products.
But the increases have been much larger for equities. The ADV for stocks rose 48% to 8.2 million contracts in July. That follows a record 10.1 million ADV in June, up 54% year over year.
This shows growing Fed indecision about rates, as well as perhaps high market valuations and weak economic indicators, are prompting investors to rebalance their holdings to match evolving market conditions.
It also shows that CME stock, up 10% over the past month, thrives on volatility and may be a good option right now to profit from the uncertainty.
Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CME Group. The Motley Fool has a disclosure policy.