Great article on understanding the Eurodollar Market

nonlinear5 said:
Thanks for the link, Maverick. I know it is well explained in the article, but I anticipate a lot of confusion in this thread. Just to clear it up, Eurodollar (symbol GE on CME) has nothing to do with either EUR.USD cash (Forex), or with CME (symbol 6E) Euro-USD futures.
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Generally speaking, when one is talking about the Euro Currency they just say the Euro. Eurodollars (plural) is referring to dollar deposits.
 
Thanks for sharing the blog @Maverick74. It's a good read. I earned my stripes in that pit many, many years ago. The structure of Eurodollars made it an instant success as the quarterly expiration structure was ideal for bankers to lay off risk. This gave them the ability to structure and market exotic swap and forward agreements. This also helped turn Eurodollars into a spreader nirvana. 2, 3, 4, 8, 16 etc legged spreads are very common coming out of the banks and the prop community (locals) learned how to make markets in there to take on and trade around the bankers spreading their risk. We invented the "implied" matching engine in that pit by guaranteeing implied prices long before Globex made its debut.
 
that was a big pit when next to sp. when things picked up you could hear noise circle around eurodollars wait wait then sps get going
 
Yes, we'd sometimes play off of spoos and / or word from the bond pit at CBOT. We had some specific arb signals for 30 year activity...if Tom Baldwin was buying a backward swipe of your scalp. If he as selling, a forward swipe.
 
The author is a pretty good writer.

Overall, not a bad piece, in spite it being rather simplistic and, occasionally, a little inaccurate.
 
Martinghoul said:
TOverall, not a bad piece, in spite it being rather simplistic and, occasionally, a little inaccurate.
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Read all three of the series and you might change your opinion. The first is only a teaser and doesn't say much of anything. The second and third contain misstatements of fact, unsupported guesses of unobservables, forged/photoshopped chart(s), and bogus aggregate stats. He conflates risk-free rate and marginal return on capital (MEC in Keyneian terms) and fails to consider alternative explanations for his main observable.

He also contradicts himself between segments two and three, pitches his own services (his "Insider Alerts" and his interviews), and, despite claiming that "how to make money from the analysis" is the "bottom line," makes only one actionable call (USD "sharply" higher).
 
Kevin Schmit said:
Read all three of the series and you might change your opinion. The first is only a teaser and doesn't say much of anything. The second and third contain misstatements of fact, unsupported guesses of unobservables, forged/photoshopped chart(s), and bogus aggregate stats. He conflates risk-free rate and marginal return on capital (MEC in Keyneian terms) and fails to consider alternative explanations for his main observable.

He also contradicts himself between segments two and three, pitches his own services (his "Insider Alerts" and his interviews), and, despite claiming that "how to make money from the analysis" is the "bottom line," makes only one actionable call (USD "sharply" higher).
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You're right... Having read the other two pieces, I've concluded that the author has a very limited understanding (if any) of how the money mkts operate. That has led him to all sorts of grand conclusions which have very little to do with reality.
 
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