Speculators scaled back their bearish bets on Eurodollar futures to the lowest levels since July 2016 on expectations the Federal Reserve might lower short-term interest rates to counter a slowing economy, US data released on Friday showed.
Speculative net bearish or "short" positions on CME Eurodollar futures declined for eight straight weeks to 306,262 contracts on March 26, the fewest since July 10, 2016. Disappointing US, Chinese and European economic data in recent weeks have stoked fears about a global economic slowdown.
Last week, the yields on benchmark 10-year Treasury notes fell below the interest rates on three-month US Treasury bills for the first time since 2007.
This yield curve inversion has preceded every US recession in the past 50 years.
Some analysts and traders said an inverted yield has to persist for some time to be an omen of an economic downturn.
Late Friday, three-month T-bill rates and 10-year note yields were nearly at parity at about 2.40 percent.
Meanwhile, speculators' net bearish bets on US 10-year Treasury note futures rose modestly earlier this week as economic worries stoked a safe-haven stampede into bonds, according to the latest Commodity Futures Trading Commission data.
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