What will happen to the Eurodollars when the Fed Rests

Discussion in 'Trading' started by dsguns1, May 21, 2005.

  1. dsguns1


    Ive been pondering this for awhile. Maybe someone with a few yehars under their belt can tell me what will happen to the trading in Eurodollars once we are sure the Fed will stand pat on moving the Fed Funds.
  2. They will start to price in Fed easings. As for the Eurodollars the Fed is never at a standstill. They are either trying to price for a tightening Fed or an easing Fed. Just my observation after trading them for over 15 years.
  3. dsguns1


    Thanks Trade Ya!!!!
  4. kjsnow25


    you need to look at all the contracts of the ED curve vs the treasury curve. Fronts and reds give a good indication of fed policy, but a more indicative contract is the FF contract for the short term. The ED curve will take the shapeof the treasury curve - becuase it really is 3 month segments of a ten year curve - but the fronts and spreads in the front will take its cue from the FF curve. Learn how to price up the true odds of a fed move (be it a tightening or easing) first in the feunds, and thensee how it has applied and does apply to the ED curve. Front and red spreads and patterns will emerge for you.....just becuase the fed isn't tightening, doesn't mean the curve implies otherwise. watch historical spread levels for guidance.