Fed’s Cure for Money Markets Complicates Betting on Rates
- T-Bill/OIS spread tightens on Fed’s buying, dwindling supply
- Narrowing gap may complicate pricing for Eurodollar traders
The Marriner S. Eccles Federal Reserve building in Washington.
Photographer: Bloomberg/BloombergThis article is for subscribers only.
The Federal Reserve’s mass purchases of Treasury bills are creating distortions in money markets and that may make it harder for Eurodollar traders who bet on the interest-rate outlook.
What started as an attempt by the Fed to relieve strains in money markets is having an unintended impact on some of the world’s most important borrowing benchmarks.