This chart shows the Eurodollar futures, which are very liquid, with more than 1 million contracts of open interest. It is linked to LIBOR (London Interbank Offered Rate), which is the rate that U.S. Dollar deposits earn on accounts outside the United States. In an era in which the Federal Reserve artificially manipulates interest rates through quantitative easing, LIBOR and the Eurodollar futures are a more accurate barometer of unobstructed interest rates.This daily chart shows that Eurodollar futures are gradually, but slowly declining in value because of rising interest rates that investors are demanding to assume the rapidly-expanding risk of investing in dollar-denominated debt, and especially U.S. government debt. With the U.S. treasury planning to borrow about $2 trillion this year, investors are showing increasing skittishness at the idea of accepting this risk without hiking the interest they earn in compensation.
Today's candle indicates a possible breakout is imminent, with "unobstructed" interest rates potentially rising much more rapidly. The long wick on today's candle, however, is somewhat worrisome, since it may form a hammer, a reversal signal. I love to trade the Eurodollar futures because they are very liquid, and move fairly slowly. I consider it to be "easy money".
