Words matter, and that is what...>

US EURODLR FUTURES: Words matter, and that is what Federal Reserve chairman

Janet Yellen is counting on it as she is scheduled to appear at this week's

Jackson Hole Economic Policy Symposium that starts Friday (schedule for event

available Thursday night). What are the chances the Fed chair will reveal

something substantive about policy at the event? Slim to none and Slim left

town. Instead, the Fed chairman and a majority of Fed presidents will most

likely continue to speak in hawkish terms, (ironically) ignoring consistently

lagging inflation figures. Some newswires have been parroting this theme of late

(such as Telegraph on Monday). On the flipside, Bloomberg called Monday's

decline of front end Eurodollar futures open interest as "capitulation" in the

face of declining hike probability. But a few savvy option desks have been

building upside call positions to take advantage of a pause in rate hikes (or a

drop in OIS) through year-end for weeks now. Latest rate hike probability for

Sep 20 and Nov 1 FOMC meetings has effectively dropped to 0.0%, while chance for

a hike at the December 13 FOMC hold at 31.6%. Who's right, the Fed or market

pricing? Mkts likely to be disappointed if they hope for an answer Fri.