John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Terry Whitman who wrote (5089)	11/16/2001 12:08:34 PM
From: John Pitera	Read Replies (1) of 33421

Terry, the Eurodollar contract has hit all time highs in open interest. over 5 million contracts are open in Dec alone, with a notional value of 5 trillion dollars. The Commitment of Traders shows that the Commercials are very short and the larger traders and small specs are very long, it's only a matter of time until we see a move down in price and up in yield. the Eurodollar is a TBill equivalent yield, but it's for deposits outside of the US and not backed by the US banking system or Govt. Hence the TED spread, the TBill/Eurodollar spread contracts and expands due to concerns about the health of the global economy and possible overseas bank or financial institutional defaults. The Eurodollar rate and contract has nothing to do with the Eurocurrency for those who are not sure. It's a 3 month interest rate contract!!! It took me a while to get that -g- John

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