Raoul, thanks very much for the update. I’m happy to have added some to this trade the other day. The Interactive Brokers code is ‘GE’; can anyone explain why everyone doesn’t use the same codes?

for those who can't trade Eurodollar futures (or options) what would be a good alternative/ second best. Any ETF's? or look to express through shorter dated Treasury ETF's (eg. SHY??)

Hey Raoul, how does the FRA-OIS spread factor into Dec ED futures price? Eg. If the Fed cuts 50bps more into year end but FRA-OIS is at 50, does that mean Dec ED futures stay at 98.0?

It seems like the TVIX ETN is very cheap considering how much vol could potetntially spike, what do you think about the risks to this ETN. IT seems that the upside downside is very assymetrical? Am i missing any risks, thanks!

Any thoughts on the F downgrade and how the market reaction either confirms or shifts your doom loop hypothesis? Was the market able to absorb that rotation out of IG funds (pensions, etfs, etc.) into HY funds or has the shift not really started yet?

1) Thanks Raoul that you took time off from your wedding preparations and gave us an update. Indeed it was very painful correction. I planed to sell some calls for EDZ9 on the high but I was on vacation and just forgot to do it and all the profit was gone on my arrival back to Malta. Anyway I have some important staff to share. First let me add to the importance of October month and specially Oct 31. A lot of stress in Funding of Mkts is due to China. We know from Mr Bass some of the reasons / tricks China was doing. Here is the thing. China to support it's currency is lending USD in forward mkts. October 31 is the tick for the 3 months clock where Big Mamma (CB of China) will have to extend the loan or take a hit on exchange rate, but most probably both as it is expensive to roll it forward. So we could get a jump in the exchange rate at that time as we got it in May and August. Additionally Oct 31 is as well the date for hard brexit. It may or may not happen, I'm not following this topic that extensively but if some of this stuff happens at the same time it will have amplifying effects. And when is the FOMC meeting? Oct 29-30 So together with what Raoul mentioned October will be a focal point in time. Also cyclically the funding use to ease after October which is good for EDZ contracts. Let me continue about funding and ED contracts in next post so not to make this post too long. Artur @Ar2go2

2) Continuation. Funding issues and EDZ. EDZ contracts usually suffer form funding issues. This is something I didn't know about ED contracts and understood it first after the fact from some old STIR traders. Let me give you example form 2000. Before the turn of the century and Y2K, trading the “turn” was a pretty big deal. Funding issues could arise going into year end, and money desks actively hedged this risk. In futures markets, this pressure was manifested by relative weakness in December euro$ contracts, as they cover the three month period from mid-December to mid-March. When Y2K occurred, the fear was that code that had only used the last two digits of the century would foul banking, transportation, and all sorts of other services, with no distinction between 1901 and 2001. In any case, the Fed stepped in and guaranteed year-end liquidity to quell impending signs of panic. Since then, the kink with December contracts abated. Until the last couple of years. In the old days, a standard trade was to sell Dec/March three month spreads or sell the Dec LED, which was selling the one-month Dec ‘libor’ contract (no longer in existence) and buy the Dec 3-month contract, because the turn was more concentrated in the one-month period. Now these pressures are apparent again. The thing is this. If FED would fail to add the needed liquidity we could go much, much lower than 98.00 as ED contracts are not 1:1 with UST. In the same way Sovereign debt crisis like Italy defaulting on it's bonds would probably mean higher yields globally and lower value of ED contracts but it's different story. If you invested in futures ZN (UST10Y) in June, you still have about 50% of your profits. I don't see any reason this should go away just don't put all eggs in one basket. I added to EDH contracts instead which are the March contracts. Will probably take some ZN or ZT positions but it's maybe to late now. It could be wise to take some OTM insurance put positons in EDZ9 on Oct run in case FED fails to contain funding crises or take the profits. Paul seams to think 25 is ok while we need 50 to un invert curves. Just my observations. To see the EDZ9 gap to Jan EFF on tradingveiw you can use ZQF2020-GEZ2019 Artur @Ar2go2

Thanks for the Update - quick one: if have not done so far is this a point to entry an ED position now and secondly can you give specifics where you would do as in the past? Many thanks Hendrik

I wondering about euro dollars and Libor. Are there any knock-on effects from the repo situation that might spill into these in a negative way ? I'm lock step in the recommendation, I just wonder if the surest safest way to play this is long duration (tBonds) and gold, adding back silver. Thanks in advance.

Raoul, As pointed out by Andreas Steno Larsen's EU conundrum RV TV dated 9/19/19, Fed's or ECB's QEs or equivalent POMO will result in a higher yield due to inflation expectation. MMT or incumbent policy makers seem to prefer not to US rate going into negative territory as USD is still only Reserve currency, and too lower interest rate will worsen the US fiscal situation. Them there might be limited upside of EDZ0 or lower bound of bond yield. That's what happened during the past two weeks' price fall of ED futures, and fully reflected without no upward movement potential in sight.. What do you think? Looking forward to your reply...

Hi Raoul, from a chart perspective I can't see the upside on eurodollar. I can see downside to 97.7 and then more retraces lower. This, in my opinion is best seen from the monthly chart.

8000 is a good place to start scale into bitcoin. If we hold 8000 the bull is intact. Below 6000 it gets questionable on medium term.