December 2020 Yield Curve

The yield curve looks pretty good. Long-term rates still are recovering. The expected date of the first short term rate hike also appears to be coming closer. This all seems like good news to me. All in all, pretty good monetary management for the COVID-19 recession, I think.

It seems to me that a short position in early 2023 Eurodollar contracts has a nice risk/reward balance. Not much room for downside (declining interest rates), but quite a bit of room to run higher (higher interest rates).

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