- IG Index Cuts Spreads on Treasury Products
- Dominance of Macroeconomic News Spurs Interest in Asset Class
These products can be used to take a view on where a country’s interest rate is headed next, or to measure the market’s confidence in a government’s ability to service its own debts. As a result, Treasuries are now attracting unprecedented levels of interest from retail clients, as the global economic crisis rolls on.
Tim Hughes, IG MD, commented, “With macroeconomic news now making the headlines on a daily basis, a number of our clients are seeing Treasuries as an increasingly useful way of getting exposure to markets that historically may not have seen the same degree of volatility as currencies or indices.
“Significant themes like the future of the euro and managing the US deficit are going to linger for some time yet, so we see these spread cuts as a way to introduce even more spread betting accounts to this important asset class.”
Financial spread betting offers clients a number of benefits when trading Treasuries, including a transparent pricing structure and the ability to make profits free of tax*.
Also, because spread betting is a margin-traded product, only a percentage of the total exposure is required initially as a deposit.
Spread Bet on TreasuriesSpreads on the 2-year and 5-year Treasury Notes, as issued by the United States, have been cut from four points to two points.
The UK Short-term Gilt has been given a similar cut, while Euribor, Euroswiss, Sterling Deposit and the German Schatz have all seen their spreads cut from two points down to one.
Other interest rate products are also available from IG Index UK, including Canadian, Japanese and Italian bonds.
Spread Bet on BondsBelow, spread betting firms that offer markets on government bonds:
|US T-Bond 10 Year Future|
|US T-Bond 30 Year Future|
Spread Bet on Interest RatesBelow, firms that offer markets on short-term interest rates (STIRs):
|Short Sterling Future|
Spread Bet on Italian BondsDavid Jones, IG Index‘s Chief Market Strategist, commented, “Historically, yields across all the eurozone sovereign debt instruments were very similar, with the German issues being seen as the benchmark.
“However, over the last 11-12 months there has been a decoupling of this relationship, so the heavily traded BOBL and BUND are no longer a reasonable proxy for other eurozone government bonds.
“This also means there has been a huge increase in the volumes traded in the underlying market for instruments like BTPs (aka Buoni del Tesoro Poliennali).
“A liquid underlying market – combined with the current levels of volatility and a steady flow of news that has the ability to impact the price – has the potential to make BTPs popular with those spread betting on bonds and interest rates. An expanded interest in fixed income instruments as a whole could follow as well.”
Jones, added, “Fixed income markets have often been seen as too slow moving to be of interest to the majority of the spread betting community. However, with central bankers, politicians and ratings agencies now having the potential to shift bond yields, and so long as the risk of default looms, the popularity of trading these instruments will continue to build.”
IG Index is offering Long-Term Euro-BTP (BTP) futures contracts as determined by Eurex.
Spread betting carries a high level of risk. You can lose more than your initial investment or stake. Spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.