Economics

Citi Joins Morgan Stanley in Backing Bet on Faster Fed Hikes

Eurodollar steepener trades continue to attract attention
Swaps market is pricing 76% chance of a June 2022 rate liftoff

Fed's Bullard: It Makes Sense to Be Hawkish on Rates

Provide news feedback or report an error

Confidential tip?

Send a tip to our reporters

Site feedback:

Take our Survey

By Edward Bolingbroke

November 17, 2021 at 8:14 PM UTC

Updated on

November 18, 2021 at 3:48 AM UTC

This article is for subscribers only.

More Wall Street banks are wagering that the Federal Reserve will hike rates at a faster-than-expected pace, with Citigroup Inc. joining Morgan Stanley in backing trades that will profit if the central bank does just that.

On Wednesday, Citigroup analysts recommended a June 2022-June 2025 eurodollar steepener, a trade that would profit if additional rate-hike premium is priced into that part of the yield curve. Those at Morgan Stanley are currently backing a similar trade, but targeting a steeper spread between the September 2022 and December 2023 contracts.