Contango
Contango is a futures curve that rises with tenor — deferred contracts richer than nearby, often a storage and rate story.
Definition
Contango refers to deferred contracts richer than nearby, often a storage and rate story. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
Physical balance, inventories, and curve shape transmit inflation and growth shocks. When deferred contracts richer than nearby, often a storage and rate story shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what contango is saying. If deferred contracts richer than nearby, often a storage and rate story moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Read spot vs curve and inventory; financial flows can dominate short windows. Prefer a short written null hypothesis for Contango: what would falsify the current reading in the next window?