Trading Treasury Securities

When you purchase a treasury security for a set time period, the government owes you money.

You are eligible to receive ongoing interest from the value of the loan, even though the face value of the bond remains unchanged. Moreover, it is not mandatory to hold the bonds until the maturity.

Further, you can speculate on the likely future value of the bond. There are several factors that can influence the bond value, including geopolitical developments in the economy of that country, the monetary policies affecting the risk of inflation, or the value of its currency.

Choosing Treasury Securities

You can place CFD trade on government treasury securities across:

Euro Dollar

Bund

Bobl

BTP

T-Bond

T-Note

Euribor

Short Sterling

Euro OAT

UK Gilt

3 Key Categories

Treasury Bills

A Treasury Bill (or T-Bill) is a short-term debt obligation backed by the U.S. Treasury Department with a maturity of one year or less. Treasury bills are typically sold in denominations in $1,000-$5 million range.

The longer the maturity date, the higher is the interest rate that the Treasury Bill will pay to the investor.

Treasury Notes

A Treasury note (or T-note) is a marketable government debt security with a fixed interest rate and a maturity of 2-10 years.

The Treasury auctions 2-year notes, 3-year notes, 5-year notes, and 7-year notes on a monthly basis. The agency issues 10-year notes in February, May, August, and November, and as re-openings in the remaining eight months. Treasury notes, pay interest semi-annually, and are issued at a $100 par value and mature at the same price.

Treasury Bond

Treasury bonds (T-bonds) are fixed-rate U.S. Federal government debt securities with a maturity of 20-30 years. T-bonds pay interest semi-annually till maturity, at which point, the owner receives the face value of the bond.

Treasury bonds earn periodic interest till maturity, at which point, the owner receives an amount equal to the principal. It must be noted that, yield is referred as the interest rate paid by the bond.

How to invest in Treasury bonds?

Treasury bonds are considered popular investment products, and usually trade in the public markets daily during market hours.

There are several factors that can influence the future value of a country’s bonds, depending on the economy’s health and geopolitical factors.

Traders watch the price movements to speculate on the treasury securities. Typically, trading treasury securities CFDs does not require one to directly own the asset.

For instance, when a country’s currency depreciates, or it is amid looming political crisis, one expects the value of the treasury bond to fall, in which case the trader chooses to go short.

Depending on how things take a turn, the trade results in profit or loss. Note that, leverage amplifies both profit and loss.

Investment Approach

CFD Trading in Treasuries can be best understood with an illustration:

Let’s say the Gilt future expiring in June 2022 is quoted at a bid/offer price of 12731/12733.

Why Trade Treasuries CFDs with Century Financial?

Choose over 90 government bond and interest-rate instruments globally

Tight spreads offering potential to profit from small price movements

Flexible leverage to control your level of risk

Go long or short