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Why the Fed Is Watching the Six-Month Eurodollar Curve
Description
Episode 98 of The Federal Reserve Podcast digs into a specific market signal the Fed is watching closely right now: the six-month Eurodollar futures curve. With the fed funds rate stuck at 3.63 percent and the ten-year Treasury yield climbing to 4.48 percent, the Eurodollar curve has flattened sharply — suggesting the market doubts the Fed will cut rates anytime soon. Lucas and Luna explain what Eurodollar futures are, why the six-month tenor matters for monetary policy transmission, and how this curve has historically predicted turning points before the FOMC acts. They also touch on the ECB's recent divergence and what Lagarde's hinted exit means for dollar funding. No broad Fed overview — just one curve, one question, and what it says about the rate path ahead.