Interest Rates Spread Betting
Interest Rates Spread Betting Comparison |
A price comparison table covering the popular interest rate markets:
| Euribor - Spread Size |
2 |
3 |
1 |
2 |
3 |
2 |
2 |
2 |
| Euribor - Min Stake |
£1 |
€0.50 |
£5 |
£1 |
£1 |
£1 |
£1 |
£1 |
| Euroswiss - Spread Size |
2 |
- |
1 |
3 |
- |
2 |
2 |
- |
| Euroswiss - Min Stake |
£1 |
- |
£5 |
£1 |
- |
£1 |
£1 |
- |
| Short Sterling - Spread Size |
2 |
3 |
1 |
3 |
2 |
2 |
2 |
2 |
| Short Sterling - Min Stake |
£1 |
£0.50 |
£5 |
£1 |
£1 |
£1 |
£1 |
£1 |
Comparison Notes.
- this table is not meant to be inclusive, interest rates spread betting may be available through other brokers.
Interest Rates Analysis and Trading News
|
| 22-May-13 |
[3:30pm] Bernanke Remains Dovish
Fed Chairman Ben Bernanke did not disappoint this afternoon, coming out once again in support of the Fed's loose monetary policy.
It seems that the comments from a couple of non-voting Fed members last week were just as unreliable as most had expected.
Bernanke has not wavered from his dovish stance since the Fed announced its QE3 program last year and there was nothing to suggest he would today.
One thing that has been clear in all of this is that the markets have a remarkably short memory, something we'll probably see more evidence of again in the coming weeks if we see more positive US economic data.
In reality though, the Fed's $85 billion of asset purchases are here to stay, at least in the short-term, and are unlikely to be tapered before the end of this year.
Although that won't stop rumours circulating between now and then and the markets latching on to them.
Update by Craig Erlam, Market Analyst, 
|
| 22-May-13 |
[11:14am] Bernanke to Clarify US Monetary Policy
US futures are pointing to a flat open on Wednesday, ahead of a closely watched Bernanke speech and the release of the Fed minutes from earlier this month.
There has been a lot of confusion in the markets recently about when the Fed will begin to phase out its asset purchase program.
This hasn't been helped by mixed comments members of the Fed, some of which have suggested a plan is being put in place to phase it out starting this summer, while others have suggested no such plan exists, and purchases will continue as they are until we see further improvement in the economy.
Clearly both of these can't be true, which is why we're seeing little direction ahead of Bernanke's speech later.
When you're getting mixed messages from other members of the Fed, you can always rely on Bernanke to drop a pretty clear hint about what to expect next.
So far, Bernanke has remained pretty dovish, which is what I expect more of today. However, any hawkish undertones from Bernanke could spark some panic in the markets.
It seems pretty clear that the main reason for both the Dow and the S&P hitting all time highs has been the large amounts of liquidity that has flooded the financial markets, in the form of QE3.
The first clear sign that the Fed is prepared to scale back its purchases, from the current level of $85 billion per month, will surely mark the end of the rally and the beginning of the long overdue correction.
It's no wonder then that there's a cautious tone in the markets ahead of Ben Bernanke's speech and the release of the minutes from earlier this month.
The minutes could provide additional clues as to when we can expect to see the Fed taper its purchases, with some members clearly becoming concerned about the costs and risks associated with such aggressive monetary policy.
King Fails to Persuade UK Policy Makers to Back Further QE
The US is not the only ones concerned about the risks of ultra-loose monetary policy.
I think it's safe to say that there will be no increase in the asset purchase facility at the next Bank of England meeting in June.
The minutes from the May meeting showed that Sir Mervyn King failed once again to convince even one more policy maker to vote in favour of additional stimulus.
In the past, King has not had anywhere near as much trouble convincing the other policy makers to increase the asset purchase facility.
Either the BoE Governor is losing his touch, or the other policy makers have lost interest with the same old response to the flat economy, and are waiting for Mark Carney to offer an alternative when he takes over as BoE Governor in July.
Whatever the reason, it seems King will not get his way this time around but Carney's first meeting in July should be extremely interesting.
The UK economy is once again showing signs of weakness, with retail sales in April falling by 1.3% against expectations of flat growth.
At the same time, inflation fell significantly in the same month, to 2.4%, down from 2.8% in March.
The only question now is whether Carney will do a better job of getting the other policy makers on his side, than his predecessor has managed recently.
Carney's vote after all, is only one of nine, so he is still reliant on other policy makers to get his ideas through.
Update by Craig Erlam, Market Analyst,
|
| 21-May-13 |
[11:18am] The main event of the day was always set to be the UK CPI rate of inflation, which was widely expected to fall from 2.8% to 2.6%.
However, the surprise reduction to 2.4% sent shockwaves across the currency spread betting markets, sending GBP/USD lower by 30-40 points.
The importance of this rate of inflation is that the CPI level is utilised by the Bank of England as the core target in setting their future policies.
Subsequently, a reduction towards the 2% target provides increased room for manoeuvre and the potential for additional asset purchases from the MPC, which have remained at £375 billion since July 2012.
Rumours within the UK that the ability of incoming BoE governor Mark Carney to make any meaningful impact will be lessened owing to the stifling effects of inflation will no doubt subside somewhat.
This move closer towards the target rate is a shift which was a necessary prerequisite to any further consequential expansive policies.
RBA Minutes Suggest Further Rate Cuts Less Likely
Earlier this morning, the RBA released minutes from two weeks ago, which was the meeting where the cash rate was cut to a record low.
Interestingly, the value of the Australian dollar was cited as a key reason for the rate cut, which was utilised as a tool to boost businesses in the face of worsening trade terms.
This suggests that the Australian dollar rate is clearly inversely correlated with the RBA cash rate and, subsequently, the recent devaluation of the dollar is likely to point to a lower likeliness of interest rate cuts in June.
Lastly, FOMC member Charles Evans disclosed that he remains highly dovish with regards to the current Fed standpoint on asset purchases, with no end date or 'tapering' suggested for now.
Evans is relevant owing to the fact that he is a voting member whereas some of those whom discussed a potential tapering last week did not have the same voting power.
Markets are now looking towards tomorrow's speech from Ben Bernanke to gauge which side of the fence Big Ben sits on.
Update by Joshua Mahony, Research Analyst,
|
» For more see Stock Market Trading News & Analysis.
This content is for information purposes only and is not intended as a recommendation to trade. Nothing on this website should be construed as investment advice.
Unless stated otherwise, the above time is based on when we receive the data (London time). All reasonable efforts have been made to present accurate information. The above is not meant to form an exhaustive guide. Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.
Where Can I Spread Bet on Interest Rates? |
You can currently spread bet on interest rates at:
Where Can I Trade Interest Rates for Free? |
It depends upon what you mean by free.
If you're looking for a free Demo Account where you can practice trading the interest rate markets, see below.
If you want tax efficient trading, then don't forget that in the UK, spread betting is tax free*.
If you are looking for a low cost trading platform, note that you can spread bet on Short Sterling, Euribor and other interest rates commission free and with no brokers' fees at:
Interest Rate Trading Practice Account |
If you are looking for a free Test Account where you can give spread betting a go, and practice trading bonds then you can always try:
Each of the above currently offers a free demo account.
Advert:
Interest Rates Spread Betting, sponsored by FinancialSpreads.com.
You can spread bet on Interest Rates with
Financial Spreads.
|
How to Spread Bet on Bonds and Interest Rates? |
In this example we will look at interest rates, having said that, you spread bet on Government bonds in the same way.
Let's say you are thinking about trading STIRS (short term interest rates) and you to look up the Short Sterling futures market.
In this case, your spread betting company quotes you: 95.40 - 95.64.
The quote implies that, on the closing date for this futures market, interest rates will be between 4.36% and 4.60%.
This is calculated by taking 100 basis points and subtracting the estimated interest rates at the time of expiry, ie 100% - 95.40% = 4.6%, and 100% - 95.44% = 4.36%.
Continuing the example, let's say you think that interest rates will rise, therefore you Sell the Short Sterling market at 95.40 for £5 per point. For the Short Sterling market, 1 point is 0.01.
As it happens the interest rates fall and therefore the Short Sterling market rises. The spread betting quote moves to 95.76 - 95.84. You decide to cut your losses and close your position.
To close a trade you place a same sized traded in the opposite direction of your original trade, ie you now Buy £5 per point at 95.84.
To work out your profit/loss, you take the difference between the closing price (95.84) and the opening price (95.40), and multiply that by your stake size.
Profit/Loss = (Closing Price - Opening Price) x Stake
Profit/Loss = (95.40 - 95.84) x £5 per point
Profit/Loss = -0.44 x £5 per point
Profit/Loss = -44 points x £5 per point
Profit/Loss = £220 loss
However let's say you were right, i.e. that interest rates would rise and so the Short Sterling market would fall. In this case, you let the trade run until the expiry date and the market settles at 95.10.
Again your profit/loss is calculated by calculating the difference between the closing level (95.10) and the opening price (95.40).
Profit/Loss = (Closing Price - Opening Price) x Stake
Profit/Loss = 95.40 - 95.10 x £5 per point
Profit/Loss = 0.30 x £5 per point
Profit/Loss = 30 points x £5 per point
Profit/Loss = £150 profit
Note – example taken from 2007. You can check the expiry date of a futures market once you log into the trading platform.
Where to Get Live Interest Rate Prices |
If you want to access quick live market information then you could do worse than opening an account with a firm like Financial Spreads.
Also, you don't have to trade with them, if you just open an account (which is free to do) then their data is free. The catch? You'll get the odd email or letter from them. Having said that, as per the example chart below, you can see that their free charts are also useful.
If you do open an account with Financial Spreads, or any other spread betting firm, be careful though. Before you start trading remember that spread betting carries a high level of risk to your capital and you may lose more than your initial investment. Only speculate with money that you can afford to lose.
There are also live prices available with:
Interest Rate Spread Betting Charts |
As mentioned above, you can get free STIRs charts with spread betting companies like FinancialSpreads.com.
You can alter the charts to see market data by the minute, by the hour, by the day, by the week etc. There are also many other settings to help you analyse the STIRS markets.
As you can see, the charts show how the markets are not perfect and how you can expect the prices to "gap".
FinancialSpreads also have another pretty handy tool, i.e. their free Demo account (mentioned above). You can open a Demo account and place risk-free test trades whilst you hone your financial spread betting skills.
Interest rate spread betting chart:
Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Interest Rates Spread Betting' by DB, updated 22-May-13
For related pages also see:
Bonds Spread Betting, updated 15-May-13
Bonds spread betting guide with a bonds spread betting price comparison, where to spread bet on government bonds tax-free*, how to get bonds charts and prices as well as...read article: Bonds Spread Betting.
Interest Rates Spread Betting, updated 22-May-13
Interest rate spread betting guide with an interest rate price comparison. Also where to spread bet on STIRS tax-free*, where to get interest rate charts, how to spread bet on interest rate futures and...read article: Interest Rates Spread Betting.
Spread Trading Bonds and Interest Rates, updated 15-May-13
Your guide to bonds and interest rates trading with price comparison tables, where to trade, how to trade interest rates and government bonds, where to get live prices. There is also a look at...read article: Spread Trading Bonds and Interest Rates.
Spread Betting on Italian Bonds, updated 21-Jul-11
Spread Betting on Italian Bonds - You can now spread bet on Italian sovereign debt. With spread betting on Italian Bonds you can take a view on Italy's debt by...read article: Spread Betting on Italian Bonds.
Bond Spread Betting Markets and the Recovery, updated 25-Aug-10
Much as it might surprise readers the biggest investment market in the world is not equities, it's the bond markets. This market, if it is correct, is now telling us a worrying story...read article: Bond Spread Betting Markets and the Recovery.
Interest Rates Trading, updated 13-Feb-08
Adding the Northern Rock loans to the national debt makes for great headlines but it also shows how spineless the ONS actually is. At least the Northern Rock debt is backed up by a rather good mortgage book on the other side of the balance sheet. There is a whole host of much more...read article: Interest Rates Trading.
Bonds Spread Betting: European Debt Crisis Explained, updated 15-Sep-11
European Debt Crisis Explained: The latest development in the European debt crisis is the downgrading of two major French banks due to their exposure to bad government bonds. The problem arises when the bonds spread betting markets start doubting...read article: Bonds Spread Betting: European Debt Crisis Explained.
How to Spread Bet on Bonds and Interest Rates, updated 07-May-13
How to Spread Bet on Bonds and Interest Rates. A look at how to spread bet on bonds and interest rates such as short sterling. Plus answers to a range of how to spread bet on bonds and interest rates questions including which bonds and interest rates you can...read article: How to Spread Bet on Bonds and Interest Rates.
|
|
Q) Average Trading Results?
A) Get free trading tips, offers, price updates, important news and more!
|
|
