The contracts track deliverable baskets of U.S. treasuries, fixed-income securities issued and backed by the U.S. government to finance debt. Contracts are offered on all major maturity points of the U.S. yield curve, including the 2-year, 5-year, 10-year and 30-year tenors.
Contributing factors:
1. Economic growth
2. Inflation
3. Currency supply
4. FED re-discount rate
5. Federal funds target rate
6. National debt allocation ratio
7. Supply factor of national debt issuance
Advantages:
1. Deep Liquidity
Daily trading volume of over 4.2 million contracts in 2018, representing $477 billion notional face value per day.
2. Nearly 24-huor electronic access
Act as world news and events unfold, with markets trading nearly 24 hours, 6 days a week.
3. Reduce trading costs
Tight bid/ask spreads can help reduce one part of your trading costs when entering/exiting positions.
4. Flexible execution
Access liquidity multiple ways, such as via the central limit order book, blocks and EFRPs.
5. Margin offset savings
Save from margin offsets with other CME Group Interest Rate products and benchmark futures on the S&P 500 Index and Gold.
6. Capital efficiency of Futures
Control a larger notional value for a relatively small amount of capital.
7. Safety and security
Central clearing helps substantially mitigate your counterparty credit risk.
