Why You Need to Pay Attention to Bonds


5 ratings



Sam Seiden

03 Mar, 2017

in Futures

To many traders and investors, the Bond markets are complex and intimidating. However, if you’re looking for a quality set of trading markets and/or if interest rates matter to you at all then understanding the bond markets is key for your financial well-being. In this article, I want to help simplify the powerful and important Treasury markets for you and focus on three reasons why you may want to pay a little more attention to them.

Trading Income
Bonds and, most importantly, bond and note futures are fantastic trading and investing vehicles. You can trade the bond market through multiple channels including Futures, ETFs, Bond funds and more. The major Bond markets, such as the 10 Year Note and 30 Year Bond in the USA and the Bund and Bobl in Europe are some of the highest volume and most liquid markets you’ll find, which makes for very clean supply and demand levels and great trading, if you know what you’re looking for.


10 Year Note Chart – Daily

Are Interest Rates Part of Your Life?
Do you ever borrow money for a home or car? Do you have money invested in bonds? If you answered yes to either of these, you likely have a position in the bond market which is why interest rates are so important to many people.

How would you like to have the ability to forecast where interest rates are going in advance with a very high degree of accuracy? This can have an enormous impact on your life when it comes to saving money. These Bond markets are the free markets for interest rates; this is where interest rates come from. For those who don’t know, when Bond prices go up, interest rates come down. When Bond prices come down, interest rates go up and this is where rates are determined. So, in the daily chart above, by knowing where the real supply and demand is we can time the change in interest rates and predict direction with a very high degree of accuracy.

As the chart above suggests, there is key supply above with demand quite a bit lower. This is key information for someone with an adjustable rate mortgage or someone seeking a high rate of return from bonds. For investors, we would look at supply and demand levels in the larger time frames. During the recent rally in price that you see on the chart, interest rates have been declining. When price reaches that supply level just above, it will likely fall from there meaning interest rates will then go up. This again is key information if you’re about to make a long-term interest rate decision.

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Re: Why You Need to Pay Attention to Bonds

An utterly pathetic article. Hasn't this fool been paying attention to what Central Bankers around the world have been doing for the last decade?

Mar 04, 2017

Member (6144 posts)

Re: Why You Need to Pay Attention to Bonds

What about STIR Futures and Bonds?

Mar 04, 2017

Member (818 posts)