U.S. short-term rates market is ramping up expectations

233
2
U.S. short-term rates market is ramping up expectations

Traders in a key corner of the U.S. short-term rates market are ramping up short positions in futures amid growing expectations that the Federal Reserve would hike faster and more aggressively at the end of this year.

What happened to conventional greenhouse gas?

What's Front Line of the U.S.? In the wake of the stronger than forecast consumer-price report on Wednesday, preliminary CME Group Inc. data on eurodollar futures show that open interest - a number of contracts in existence - continues to surge through the end of 2022.

The biggest increase happened in December 2022 futures, which traded in a record amount Tuesday - consistent with a continued build-up of short positions. This contract is a key area in front-end rates as it coincides with expectations for when the Fed will lift its benchmark from near zero, after concluding the tapering of its bond-buying program earlier in 2022. At one time Monday, traders were fully pricing in liftoff by September 2022. A second quarter point hike is expected in March 2023.

The hedging of option bets could also be a key reason for higher open interest in eurodollar futures December 2022. Hawkish Fed plays in recent months, which increased targeting liftoff toward the end of 2022, may also be subject to extensive hedging activity as rate-hike pricing solidifies earlier than expected.

The post-CPI sell-off in the front can be due to an increasing likelihood that a tighter labor market is here to stay and stickier inflation would force the Fed to tighten earlier, JPMorgan Chase Co. strategists said in a note.

None Jane Fraser Has a plan to try and remodel Citigroup while Tormenting Rivals were downgraded.

No Homeopathy Is True? How do I protect Black Hairstyles?

None These out-of- work Americans tell us Job Market Turmoil Is Anything But Transitory