Debt Futures and Interest Rate Swaps. Futures on Debt Securities. Types T-Bills (IMM) T-Bonds and Notes (CBT) Eurodollar Deposits (IMM) Municipal Bond Index (CBT). T-Bill Futures.
Eurodollar Futures are similar to T-Bill futures. They call for delivery or purchase of Eurodollar deposits with a maturity of 90 days and F = $1M. They are quoted in terms of the IMM index. They differ from T-Bill futures in that there is a cash settlement feature. The cash settlement is based on the LIBOR. Used for speculating on ST rates and for hedging bank positions ( correlated with CD rates).
Take short position in futures to protect against a decrease in the spot price.
Short Hedging Strategies:
Hedging Cases with Debt