Why Eurodollar are good bets right after disasters?

Discussion in 'Economics' started by Daal, Jul 18, 2006.

  1. Daal


    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
  2. 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.
  3. Daal


    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
  4. 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.