What does interest rate futures mean?
Interest rate futures are medium-term, long-term and short-term deliverable financial vouchers of trading objects, and are financial futures based on securities. In fact, it is a short-term investment with a fixed term and a standard transaction amount in the trading market, and it is a forward contract for money market and capital market instruments. Like other futures, interest rate futures are also subject to legal constraints. Through open market bidding, buyers and sellers agree to deliver a certain amount of securities at an agreed interest rate on a specified date in the future. The market price of these securities is deeply influenced by the fluctuation of market interest rate. If the interest rate rises, its market price will fall. If the interest rate falls, its market price will rise. There are many factors that affect the interest rate level, but the main factors are: the government's fiscal policy, monetary policy, inflation, national production and income, and national demand for cars and houses, all of which will affect the interest rate trend. Interest rate fluctuation makes both borrowers and borrowers in financial markets face interest rate risk. In order to avoid or reduce interest rate risk, interest rate futures came into being.
Short-term and long-term interest rate futures:
Short-term interest rate futures refer to various interest rate futures with a maturity of less than one year, that is, interest rate futures of various debt instruments in the money market are short-term interest rate futures, including commercial paper futures, treasury bonds futures and Eurodollar time deposit futures with various maturities.
Short-term interest rate futures are based on short-term interest rate bonds, generally settled in cash, and their prices are expressed by 100 minus the interest rate level. The two most common short-term interest rate futures are short-term treasury bonds futures and Eurodollar futures. The term of short-term treasury bonds is divided into three months (13 weeks or 9 1 day), six months (26 weeks or 182 days) or 1 year. Among them, 3-month and 6-month treasury bonds are generally issued weekly, and 1 year treasury bonds are generally issued monthly. Unlike other government bonds that pay interest every six months, short-term government bonds are discounted at face value, and the investment income is the difference between the discounted price and face value.
Long-term interest rate futures refer to various interest rate futures with a maturity of more than one year, that is, interest rate futures of various debt certificates in the capital market are long-term interest rate futures, including long-term treasury bonds futures and municipal bond index futures with various maturities.
The repayment period of U.S. Treasury's medium-term treasury bills is 65,438+0 years to 65,438+00 years, of which 5-year and 65,438+00 years are more common. The interest payment method of medium-term national debt is to pay interest once every six months before the maturity of the bond, and the last interest on the maturity date is paid together with the principal. The term of long-term national debt is between 10 and 30 years. With its competitive interest rate, guaranteed timely repayment of principal and interest and high market liquidity, it has attracted huge investments from many foreign governments and companies. Domestic buyers are mainly American government agencies, Federal Reserve System, commercial banks, savings and loan associations, insurance companies, etc.