Tuesday marks day one of a two-day meeting of the Federal Open Market Committee. Will Fed Chair Janet Yellen offer up any clues as to the timing of a rate hike? Though the expectation is low that any fireworks are coming this week, many see the light at the end of the zero interest rate tunnel. According to a recent survey by Bloomberg , a majority of economists believe the market is underestimating the pace of upcoming rate hikes.

Hedge funds and other leveraged money managers agree, according to the most recent CFTC Commitments of Traders (CoT) report. The report shows that speculative short positions in eurodollar futures have been climbing steadily over the past eight weeks, and now stand at about 2.4 million contracts. For more on the most recent report, I invite you to take a look at CME Group’s online CoT tool:

http://www.cmegroup.com/trading/interest-rates/cftc-tff/main.html

Is this increase in spec shorts an indication that the majority of economists are correct? I am not convinced. A fairly aggressive hike schedule is already priced into the eurodollar market, with quarterly 25 basis point hikes priced in until the end of 2017 and beyond. To put that into perspective, following such a rate hike schedule assumes no market hiccups in the equity market or any economic faltering for another three years. Since the last recession was in 2009, that would indicate eight years at full speed ahead.

Call me a skeptic, but that seems a bit rosy. The other possibility is that the shorts have it wrong. If so, with all this leveraged money caught the wrong way, we could see a sizable short squeeze.

But not this week.

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