Advantages of trading interest rate futures

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

Trading US Treasury bonds and notes has many advantages. Watch these 2 minutes to learn more.

Benefits of Trading Treasury Futures

  • 24 hour trade Hours: US Treasuries are available for trading almost 24 hours a day, 5 days a week, resulting in continual price fluctuations.
  • traded on performance : Like bonds, interest rate futures are inversely proportional to real interest rates or yields. In a rising rate environment, bondholders will see their core value erode. In a falling rate environment, the market value of bonds will increase. So if yields go up, prices go down. If yields go down, prices go up.
  • Four main landmarks – US Treasury futures are available for each of the 2, 5, 10 and 30 year Treasury benchmarks. In addition, CME Group offers Ultra 10-year and Ultra T-bond futures which provide greater accuracy when trading 10- and 30-year yield curves.
  • Effectively manage exposure : Interest rate futures are often used as a risk management tool to hedge interest rate risk. Traders can hedge the risk of interest rate fluctuations by taking an opposite position in interest rate futures and managing exposure in a capital-efficient way.

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