Bond Market

Full Sized 30 Year Bond Market(US--Pit, ZB--Electronic)

Interest rate futures were pioneered by the CBOT in 1975 in response to a growing market need for tools that could protect against sharp and frequent swings in the cost of money. U.S. Treasury bond market futures were first introduced, followed by futures on 10-year, 5-year, and 2-year U.S. Treasury notes. Over the past two decades, bond market contract volume has exploded, reflecting the growth of the underlying instruments and profound changes in the marketplace. If you focus primarily on the stock market, it is critical that you become familiar with the bond market. The bond market dwarfs the equity markets. Therefore it is important to know when money is flowing out of the bond market or into the bond market. The bond markets and the stock markets also have an interesting relationship. Sometimes, they move directly opposite, during periods of portfolio reallocation. This happens when huge funds have to sell stocks and buy bonds to readjust the percentage of capital invested in each. During these times, new highs in the bond market lead to new lows in the stock market, and thus bonds become a great leading indicator.

The pit bond market contract trades from 8:20 a.m. to 3:00 p.m., Monday through Friday. The electronic version trades until 5:00 p.m. and reopens 3 hours later at 8:00 p.m., Sunday through Thursday. I always trade the electronic version. The contract months are March (H), June (M), September (U) and December (Z). The bond market moves in increments of 1/32, called a tick, and are worth $31.25 per contract. 32/32 equals one full point, which is $1000.00 per contract. A trader needs around $2,000 in their account to be able to trade 1 bond market contract.

Quotes on Tradestation for 2005 contracts: USH05, USM05, USU05, USZ05. @US is the continuous symbol. Quotes on eSignal for 2005 contracts: ZB H5, ZB M5, ZB U5, ZB Z5. ZB #F is the continuous symbol.