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Investments glossary

Backwardation


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Quotes of the day:

Let me tell you something that we Israelis have against Moses. He took us 40 years through the desert in order to bring us to the one spot in the Middle East that has no oil

— Golda Meir

Backwardation is when the current price—spot—price of an underlying asset is higher than prices trading in the futures market. Backwardation is sometimes confused with an inverted futures curve. In essence, a futures market expects higher prices at longer maturities and lower prices as you move closer to the present day when you converge at the present spot price.


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