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Precipitous Drop in Eurodollars is not Sustainable

Interest-Rates / US Interest Rates Mar 25, 2008 - 06:30 AM GMT

By: John_Handbury

Interest-Rates These days the markets are getting easier to read. For example, today long term Eurodollars got absolutely killed with Sep 2009 contracts down about 35 basis points. According to the experts this was due mainly to the bullish housing report, which showed that existing housing sales are up slightly from January.


Also upon this news the stocks of the real estate builders soared. This is laughable. The existing house sales represents only the volume of the houses that were bought or sold last month, and in no way reflects new construction. In fact the national house selling prices were down about 2% from last month.

This scenario is comparable to your broker telling you to buy stock because the volume is up. What it does represent is that finally the motivated house sellers have come out of denial and realize they must lower their selling prices to move their properties. This is an excellent short-term buying opportunity for Eurodollars.

I am buying September 2009 Eurodollars at the currently bargain price of 9714. They'll be well above 9850 when the federal fund rate falls below 1 percent later this year.

By John Handbury
http:// www.

Copyright © 2008 by John Handbury - All rights reserved.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Do your own due diligence.

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