Bond Futures Market & Treasury Bond Overview

A bond futures contract is a contractual agreement between a buyer and a seller where they agree to transfer a treasury bond for a set price at an agreed upon date in the future. Futures mirror the fluctuating interest rates of the securities. Therefore, if the rate goes down, the buyer could suffer losses. The same holds true for the seller if the rate goes up.

Treasury bond futures represent an opportunity for day and swing traders to invest in the performance of securities without putting down a lot of money. They can also help traders sure up their investment in fixed-income securities, which is important as treasury bonds represent a major part of most investors’ interest rate risk management.

Treasury futures are available at the Chicago Board of Trade (CBOT) and the MidAmerica Commodity Exchange, and all pricing and features of the contract are standardized by the CBOT. They are offered on 2-year, 5-year, and 10-year U.S. Treasury notes and 30-year U.S. treasury bonds. Treasury bond futures can be used for both long and short positions and are heavily traded. In fact, CBOT Treasury future contracts are the most actively traded interest-rate contracts available.

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