Eurodollar futures

Hedging by eurodollar futures

Interest rate		increase	decrease
Floating-rate bond (indexed to LIBOR)	long	yield increases (+)	yield decreases (-) (*)
Eurodollar futures contract (LIBOR-based contract)	long	loss (-)	gain (+)
Netted position		hedged/offset	hedged/offset

(*) Yield decrease means negative (cumulative total) return in the long run while price return should be positive in the short run.