10-Year T-Note vs. 10-Year Yield Futures: Which One To Trade?Introduction:
The 10-Year T-Note Futures and 10-Year Yield Futures are two prominent instruments in the financial markets, offering traders unique opportunities to capitalize on interest rate movements. This video compares these two products, focusing on their key characteristics, liquidity, and the differences in point and tick values, ultimately helping you decide which one to trade.
Key Characteristics:
10-Year T-Note Futures represent a contract based on the value of U.S. Treasury notes with a 10-year maturity, while 10-Year Yield Futures are based on the yield of these notes. The T-Note Futures contract size is $100,000, while the 10-Year Yield Futures contract size is based on $1,000 per index point, reflecting a $10 DV01 (dollar value of a one basis point move).
Liquidity Comparison:
Both 10-Year T-Note Futures and 10-Year Yield Futures are highly liquid, with substantial daily trading volumes and open interest. This high liquidity ensures tight spreads and efficient trade execution, providing traders with confidence in entering and exiting positions in both markets.
Point and Tick Values:
Understanding the point and tick values is crucial for effective trading. For 10-Year T-Note Futures, each tick is 1/32nd of a point, worth $31.25 per contract. The 10-Year Yield Futures have a tick value of 0.001 percent, worth $1.00 per contract. These values influence trading costs and profit potential differently and are essential for precise strategy formulation.
Margin Information:
The initial margin requirement for 10-Year T-Note Futures typically ranges around $1,500 per contract, while the maintenance margin is slightly lower. For 10-Year Yield Futures, the initial margin is approximately $500 per contract, reflecting its lower notional value and DV01. Maintenance margins for yield futures are also marginally lower, providing traders with flexible capital management options.
Trade Execution:
We demonstrate planning and placing a bracket order for both products. Using TradingView charts, we set up entry and exit points, showcasing how the different tick values and liquidity levels impact trade execution and potential outcomes.
Risk Management:
Effective risk management is vital when trading futures. Utilizing stop-loss orders and hedging techniques can mitigate potential losses. Avoiding undefined risk exposure and ensuring precise entries and exits help maintain a balanced risk-reward ratio, which is essential for long-term trading success.
Conclusion:
Both 10-Year T-Note Futures and 10-Year Yield Futures offer unique advantages. The choice depends on your trading strategy, risk tolerance, and market outlook. Watch the full video for a detailed analysis and insights on leveraging these products in your trading endeavors.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
10yearyield
Inverted Yield of 2022 Explained - Till TodayFor our housing loan, many of us, if you are in your 30s today and all the way to 70 years of age, will likely have chosen floating or short-term loan rates rather than longer-term loan rates. However, everything changed in 2022. Now, we are more likely to choose longer-term loan rates over floating rates. Why? Because today, longer-term loan rates are lower than floating rates.
This phenomenon is called an inverted yield curve.
In the 70s and 80s, there was also a period of inverted yields, and different markets moved accordingly as expected. Today, we are seeing an inverted yield once again, and the same markets are moving in a manner similar to those in the 70s and 80s.
We will do a comparison between the 70s and today’s inverted yield. Please let me know what opportunities you see after this tutorial.
2 Year Yield Futures
Ticker: 2YY
Minimum fluctuation:
0.001 Index points (1/10th basis point per annum) = $1.00
10 Year Yield Futures
Ticker: 10Y
Minimum fluctuation:
0.001 Index points (1/10th basis point per annum) = $1.00
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Market is Sensitive to what Jerome Powell is SayingAt the latest FOMC meeting on January 31st, Jerome Powell stated, 'The Fed is not ready to start cutting,' which immediately caused the yield to pivot higher. During an recent interview on Sunday, February 4th, he reiterated that the US central bank is not yet prepared to cut interest rates, resulting in another increase in the yield.
Today, we will discuss the direction of the yield or interest rates in the coming months, as well as why the Fed is carefully considering its decision to cut rates this time.
My name is Kon How, my work in this channel, as always, is to study behavioral science in finance, discover correlations between different markets, and uncover potential opportunities.
Micro 10-Year Yield Futures
Ticker: 10Y
0.001 Index points (1/10th basis point per annum) = $1.00
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Bank Run to Gold Rush Gold rush up accordingly to each major news during the bank run crisis in March.
Problem seems to subside for now. We will explore the possibility of a contagion effect to a wider bank run in this video.
A story of having too much money problem
• It is a bank – need to pay interest to depositors
• During pandemic - invested 10yrs bonds yield average 1.79%
• Before Feb 2022 Fed fund rate at 0.25%
• Mar 2023 Fed fund rate at 5%
How about the other banks, will they also have a similar problem in time to come? With uncertainty still lingering I am seeing opportunities in Gold, other precious metals and commodities.
3 types of gold for trading:
• COMEX Gold
0.10 per troy ounce = $10.00
• E-mini Gold
0.25 per troy ounce = $12.50
• Micro Gold
0.10 per troy ounce = $1.00
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
The yield curve has inverted, how to overcome this?Content:
• Difference between interest rate and yield?
• Why it is important to note of yield curve inversion?
• How to tell when Yields are inverted?
• What is the long-term trend for interest rates and yields
• How to manage a rising yield?
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
1. Difference between interest rate and yield?
i. Interest rates are a benchmark for borrowers and
ii. Yields are for lenders. For eg. investors to the U.S. government
iii. Both interest rates and yields move in tandem together
3. Why is it important to note yield inversion?
i. For eg. - when the return on a 30-years yield is lower than the 2-year yield, that indicates a
ii. For lenders or investors – a pessimistic outlook, a reluctance to commit their money to the longer-term bond, they prefer short-term deposits as the market is unclear in the long-term.
iii. For borrowers – most individuals or companies have shorter-term borrowing, for eg a 2 years fixed rate or a bridging loan. When the yields are inverted, suddenly they find them paying more on interest rates repayment.
Since interest rates and yields move in tandem, expect the shorter-term lending rates to go higher. This will hurt companies and individuals who have higher leverage items on their books.
If you are into shorter-term trading, do look into the market with live feed data.
I am starting an inflation series, in the next video tutorial, we will discuss why inflation is happening not just in U.S. but all around the world.
Micro 10 Years Yield Futures
0.001 = US$1
3.488 = 3488 x US$1 = US$3,488
3188 to 3488 = 300 x US$1 = US$300
10 YEAR Bond Yield Just Broke Above Multi-Decade TrendlineHey Guys, in this video I give my opinion that the 10 Year Bond Yield has broken out above it's multi-decade downward trendline and it's set to go higher because inflation is growing significantly and is at historical extremes above the 10 year yield. I think it's because of the Fed that has absolutely over-flooded the system with liquidity, check out the chart below of central bank assets as a % of GDP. This has big long term implications for all investors and traders, it could possibly cause poor stock market returns for decades to come in addition to the already painful higher cost of living relative to wages. Imo, Fed official's have turned millennials pensions and investments into "boomer exit liquidity" for their own benefit. They borrowed from the future and we will pay the price for that for years to come.
Let me hear your comments below with what you think about all of this? Did the Fed go too far? Are rates at the start of a multi-decade bull market?
Jared
U.S Bond Yield's & Trading EUR/USD, USD/JPY & USD/CHFIn this video, I break down how the U.S Dollar has been strengthening against the EUR. JPY & CHF since the start of 2021 as U.S Bond Yields have been rising due to inflation expectations.
This is extremely important to understand when trading currency markets.
I breakdown this historical relationship using excel spreadsheet examples and live chart analysis.
Enjoy
