Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
While the OIS strip flags the aforementioned degree of tightening in ’22, a quick look at the Eurodollar strip points to an increase in the pricing of Fed policy error shortly after. With the EDM3/M4 & EDM3/M5 spreads (we use EDM3 as the base month for the spreads as it currently has the highest implied interest rate on the Eurodollar strip) pulling sharply lower month-to-date, moving further into negative territory in the process. While the Fed is clearly cognisant of the risks that its tightening cycle poses to the economy, it is seemingly of the belief that it will be able to engineer a soft landing, markets are saying something very different. A quick reminder that the longer-term median dot in the Fed’s latest SEP lies below the ’23 & ’24 median dots, with the former residing at 2.375%.
Fig. 1: Eurodollar Jun ‘23/Jun ’24 & Jun ‘23/Jun ’25 Spreads (bp)
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.