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Benefits of Trading Interest Rate Futures

Interest Rate Futures

A popular way to capitalize on interest rate market opportunities is by trading Micro Treasury futures. These innovative contracts are based directly on yields of the most recently auctioned Treasury securities including the 2-Year Note, 5-Year Note, 10-Year Note & 30-Year Bond.

There are many benefits to trading US Treasury Notes & Bonds. Watch this 2-minute video to learn more.

Benefits of Trading Treasury Futures

  • Trade-Around-the-Clock – US treasury bonds are available to trade nearly 24 hours, 5 days a week leading to ongoing price fluctuations.
  • Traded in Yield – Like bonds, interest rate futures are in inverse proportion to actual interest rates or yields. In a rising rate environment, bond holders will witness their principal value erode. In a declining rate environment, the market value of bonds will increase. So, if yields rise, prices fall. If yields fall, prices rise.
  • Four Major Benchmarks – US Treasury futures are available for each of the treasury benchmarks 2, 5, 10 and 30 year. Additionally, CME Group offers Ultra 10-year note and Ultra T-bond futures, which offer greater precision when trading the 10-year and 30-year maturity points on the yield curve.
  • Efficiently Manage Exposure – Interest rate futures are often used as a risk management tool to hedge the interest rate risk. Traders can hedge the risk in fluctuation in interest rates by taking an opposite position in interest rate futures &manage exposure in a capital-efficient way.

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