It’s a simple trade and it’s liquid. When I see dislocation in the direction of pain to the U.S. economy, I buy Eurodollars—it’s not brain surgery.
I remember having a disagreement with a guy in Goldman’s risk unit during the big rate-cutting cycle post-2000 in the United States. He said, “Why are you guys always long Eurodollars? Why don’t you have some South American fixed income, something in Asia, some diversification?”
My reply was, “When the Fed is in an aggressive rate-cutting mode I want to be long Eurodollars because it’s the most obvious trade in the most liquid market in the world. I don’t want to be long South American fixed income or anything else when there is a clear trend in a liquid market.”
The Prop Trader