Traders Face $400 Billion Headache as Libor Angst Hits Crossroad
- Eurodollar open interest is rapidly building in May futures
- Investors are ramping-up hedges as Libor path remains wildcard
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The unprecedented uncertainty surrounding Federal Reserve measures to ease dollar funding stresses and the impact on Libor is creating an insatiable appetite for short-term interest rate options.
Open interest -- or the amount of new risk -- has topped 400,000 futures contracts in May 2020 eurodollars worth $400 billion. Thursday’s volumes topped 125,000, third most for the May 2020 contract and matched with rising open interest, yet there is no sign of positions being pared.