I’ve found a better way to bet on real rates increasing sometime in the next decade: shorting long-dated Eurodollar futures, while being long 2025 Eurodollar futures (to bet on a nearer-term decline in expected inflation).
The Eurodollar markets are saying that interest rates will start slowly rising after about 2027, implying a mild acceleration of economic growth and/or inflation.
I spent nearly 2 months trying to short the December 2032 contract, slowly reducing my ask price. As far as I can tell, nobody is paying attention to that contract. At very least, nobody who thinks interest rates will be stable after 2030.
Recent events prompted me to look for other Eurodollar contract months. I ended up trading the September 2029 contracts, which have enough liquidity that I was able to trade a decent amount within a few days.
That gives me a fairly pure bet on short-term interest (nominal) rates rising between 2025 and 2029.
I’ve found a better way to bet on real rates increasing sometime in the next decade: shorting long-dated Eurodollar futures, while being long 2025 Eurodollar futures (to bet on a nearer-term decline in expected inflation).
The Eurodollar markets are saying that interest rates will start slowly rising after about 2027, implying a mild acceleration of economic growth and/or inflation.
I spent nearly 2 months trying to short the December 2032 contract, slowly reducing my ask price. As far as I can tell, nobody is paying attention to that contract. At very least, nobody who thinks interest rates will be stable after 2030.
Recent events prompted me to look for other Eurodollar contract months. I ended up trading the September 2029 contracts, which have enough liquidity that I was able to trade a decent amount within a few days.
That gives me a fairly pure bet on short-term interest (nominal) rates rising between 2025 and 2029.