On the book Inside the House of Money many hedge fund managers mention buying eurodollars right after disasters in the US, one mention making money minutes after 9/11 with a eurodollar position. I dont understand it, why they would be any different of just holding normal dollars, why do they appreciate in events like 9/11
You're here too! EuroDollars are a flight-to-quality instrument, especially the front months. It used to be T-Bills but they don't trade as actively.
Is that because everybody gets afraid the banking system will colapse or something and they figure they get a better chance of getting their money back with a instrument that is not regulated by the goverment?I mean whats the fundamental logic behind the trade
During a disaster scenario, there can be a perception that the FED will ease 25, 50 or maybe even 100 basis points. You'll have weak-handed shorts wanting to get out too.