China devalue of the yuan is seen, initially, as stealing growth. The largest devaluation of the yaun in two decades sparked overnight concern that any gains made in China as a result of this action would be more than offset by the losses elsewhere.
Eurodollar and Treasury futures are slightly higher in early trade on Thursday, August 6 with the Eurodollar futures yield curve basically shifted 1-2 bp lower and the Treasury curve too with movement of a similar magnitude.
More than simply jumping higher on open yesterday, the December 2015 Eurodollar contract gapped higher, rallied to a new contract high and finished unchanged from opening level, but 4 basis points higher from the previous close. There is a lot going on there and much of the message is conflicting as regards the nature of trend and the prospects for future price action.
Eurodollar and Treasury futures are higher in early trade following yesterdays curve steepening activity which left the very front end of the curve marginally higher and the back end well lower. The Eurodollar futures yield curve steepened by 5.5 bps over the first 8 years while the Treasury 5-30 yield curve added another 3 bps.
The September 2015 Eurodollar future is 3.5-4 bps higher, marking the best session since early April. The news from the FOMC was not so outside consensus that this price action should have been expected "unless market participants were offside short," expecting that there would be greater inferences made about a rate hike coming soon.