Record-Breaking Day in Front-End Rates as Fed-Hike Bets Crumble
- Volumes surge across fed funds futures and eurodollars
- Open interest data for Thursday may offer clues to the rally
A dramatic day across the front end of the U.S. rates curve was backed by record volumes in a number of futures contracts amid crumbling confidence in the Federal Reserve’s ability to follow through on its projection of three 2019 rate hikes.
Heading toward Thursday’s close, a staggering number of contracts had changed hands across eurodollars and fed fund futures, including record volume in December 2019 eurodollars contracts. Trading was also unprecedented in a number of early-2019 fed funds futures, led by the January contract, in which trading tallied about 300,000 contracts. By 4 p.m. New York time, 1.5 million of the December 2019 eurodollars had traded, easily surpassing the next highest level reached in May during turmoil surrounding Italian bond and European peripheral debt.