Fed speak injected a lot of......>

US EURODLR FUTURES: Fed speak injected a lot of volatility in Eurodollar futures

this week. After a slow start, the 25bp vs. 50bp July rate cut debate boiled

over Thu after NY Fed Pres Williams' speech on "Living Life Near the ZLB", which

re-ignited hopes for the larger cut at month end. Implied odds surged from appr

30% to over 56% (CME and Bloomberg models) as short end gapped higher to reflect

the jump while Tsy yld curves steepened sharply into the close.

* The problem was, that wasn't the intended message. Fed officials said in a WSJ

article posted well after the NY close that Williams "didn't intend to suggest"

the CB "make a large interest rate cut this month," that the presentation was

more "academic" in nature. Hard to put the genie back in the bottle: while rates

scaled back the move in early Asia hours, the short end remains well bid.

Meanwhile, the Fed enters its blackout period early Saturday. 

* For the week: Lead quarterly EDU9 has gained .025 to 97.930, EDZ9 +0.030 to

98.020 while EDH0 and EDM0 are 0.070-0.085 higher. Compared to week-ago levels,

Whites (U9-M0) are 0.095-0.120 higher, Reds (U0-M1) through Golds (EDU3-EDM4)

0.090-0.120 higher.