CHART OF THE DAY: Eurodollar Futures Are Getting Smoked

Short-term interest rates are rising fast today after a similar jump yesterday as traders fade the initial market reaction to Friday's release of worse-than-expected December jobs numbers.

The chart of the day shows expected future yields on 3-month U.S. dollar deposits held in banks outside of the United States, known as eurodollars.

The curve can be used as a proxy for the market's expectation of the path of the Fed's policy rate.

The green line shows that at the close of trading last Thursday, before the release of the jobs report Friday, expectations were for a sooner and steeper path of rate hikes than at the close of trading Monday (red line), the peak of a two-day post-payrolls rally.

The blue line shows where yields are today - significantly higher across the curve than where they closed Monday. In the 2015-2016 maturity range, yields have almost completely returned to pre-payrolls levels.

Today's price action suggests that market participants are rethinking the idea that the pace of the Fed's monetary policy normalization effort could slow going forward.