Yield futures make it very easy to trade the change in this spread (and other spreads) using inter-commodity spreads (ICS). Since each Yield futures contract have a fixed DV01, one can easily trade the spread between different points on the curve (2-, 5-, 10-, and 30-year) while remaining perfectly hedged against parallel shifts in the yield curve.
CME Group’s new CurveWatch Tool is an indispensable resource for monitoring and tracking the yield curve. Combining the CurveWatch Tool with ICS ratios can give traders cutting edge analytical and execution ability that has previously been unmatched.
With such an exciting interest rate environment, there are many opportunities to make use of Yield futures. This can include U.S. Treasury auctions, CPI releases, and nonfarm payroll days. For example, one can see a prior nonfarm payroll case study illustration to understand another way to position on these potentially volatile economic release days.
With all the moving interest rate actions out there, CME Group Yield futures combined with the CurveWatch Tool allow traders to easily monitor and access the rates markets like never before.
Image and article originally from www.cmegroup.com. Read the original article here.