Backwardation / contango
CFA Level I Glossary
These describe the shape of a futures curve relative to expected future spot. Contango means futures prices sit above the expected future spot, so the curve often slopes upward. Backwardation means futures sit below expected future spot, so the curve often slopes downward. Drivers include storage costs, convenience yield, and risk premia, not simply “the market expects prices to rise.” Candidates often treat contango as a pure bullish forecast, which is incomplete.
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