Traders Start Betting on Quicker Fed Path Through 2019

As banks adjust their Federal Reserve forecasts to anticipate three or potentially four hikes this year and next, traders are scrambling to position by setting new shorts in 2019 eurodollar futures. Open interest has surged in the December 2019 contract by more than 90,000 in the past two days as traders bet on a faster pace of hikes for coming years, CME data compiled by Bloomberg show. Front-end traders are hoping Fed Chair Janet Yellen in her 1 p.m. New York time speech doesn’t temper market expectations for a March hike, which is almost fully baked in, based on OIS futures.

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