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Originally Posted by TastyTrade
When trading interest rate futures, it's important to know how bond prices and interest rates are related, as well as how varying bond durations are affected by short term interest rate changes! tastytrade explains that Bond Prices and Interest rates are inversely related, meaning that when yields rise, bond prices fall. In attempt to control longer dated maturities, the Federal Reserve will change short term interest rates. But since interest rates haven't increased in years, how do bond prices continue to change? The uncertainty of whether or not rates will change can also cause prices to fluctuate. Watch this segment to discover how much a bond's price will change in response to rate increases by learning how to calculate the Dollar Value of A Basis Point (bond delta). Then, check out some potential Interest Rate Futures Trade Ideas that take advantage of rate changes in the shorter and longer dated bond maturities!
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Bond Prices and Interest Rate Futures Explained
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