Tuesday, July 11, 2006
Here is a daily bar chart showing trading in the December three month eurodollar (interest rate) futures. Here is my last post on this market.
As you can see the market has reached the 94.30 level, the bottom of the current bear market box. In my last post on eurodollars I said that 94.30 would probably mark the end of the bear market which started from the 99.09 level in 2003.
I may turn out to be right about that, but my guess is that the Fed will as usual go a step too far in its policy of raising short term interest rates. So I am looking for this market to move up to the 1/2 point of its current box near 94.55. After that it will probably drop to 94.10 or so.
In any case, I think the drop from the 99.09 level is nearly over. As I have predicted in my 2005 and 2006 bond market forecasts, a new bull market in bonds and a big drop in interest rates, especially long rates, is just around the corner.