Government bonds are lesser known products when it comes to spread betting but still attract
plenty of interest, especially in uncertain economic times with the collapse of the financial
markets and interest rates.
Government bonds are lesser known products when it comes to spread betting but still attract
plenty of interest, especially in uncertain economic times with the collapse of the financial
markets and interest rates.
There are four government bond futures available for trading with Spreadex – the German Bund,
UK Long Gilt, US 10 Year Note and US T-Bond.
The German Bund futures contract began trading in 1998 and remains a heavily traded futures
product throughout the world. The Bund future is based on the long-term debt product issued
by the Federal Republic of Germany with a term of 8.5 to 10.5 years, and trades in the months
of March, June, September and December.
The UK Long Gilt is a notional 10 year UK government bond similar to the Bund above. The US 10
Year Note is, as the name suggests, a 10 year US Treasury bond and the T-Bond is a 30 year
Treasury bond.
The Credit Crunch and the subsequent series of interest rate cuts at the end of 2008 led to a
big increase in trading government bonds as investors fled to the relative safety they offer,
giving spread betters opportunities to profit.
An investor who thinks that long term interest rates will fall and stay low would buy the Bund or
Long Gilt, or if their view is long term interest rates are going to rise then they may decide to
short the Bund or UK Long Gilt.