Interest Rates Spread Betting
Interest Rates Spread Comparison
A spread/price comparison table covering the popular interest rate markets:
This table is not meant to be inclusive, interest rates spread betting may be available through other brokers.
|Treasuries Minimum Stake
Interest Rates Analysis and Trading News
||[10:06am] Waiting for Janet
There are no significant economic statistics on today's agenda. That will leave more than enough time for investors to speculate about Wednesday's Federal Reserve rate decision and how it will affect currency markets.
One school of thought is that a 25-basis-point increase in the Federal Funds rate is already priced into exchange rates. The other has it that Wednesday will mark the end of the phoney war and the ordure will hit the flabellum.
They can't both be right.
Update by Chris Beauchamp, Market Analyst,
||[10:24am] Expectations of a Fed hike drift on soggy sentiment
The sell-off in European equities doesn't have the same panicky feel that it did on Monday.
The more measured selloff is arguably more a reflection of the growing unease over the Fed's ability to start raising rates than further fears over China.
The early part of the week has now seen a number of institutions move their anticipated start dates closer to the end of the year.
The recent highs seen in EURUSD, above $1.17, now feel like a distant memory.
Depending on today's comments from FOMC's voting member William Dudley, they might be a precursor to further falls should comments from the Jackson Hole Symposium fail to inspire currency markets.
Update by Alastair McCaig, Market Analyst,
||[11:39am] Euro Up 5%!
Surprising to many market commentators was the euro being just as big a recipient of the 'flight to quality' as the Swiss franc.
As stock indices collapsed the euro tended to gain strength in inverse proportion rising at one stage by 3% against both the dollar and Sterling.
Since the Chinese move on 17 August the euro has risen by 5% against both dollar and sterling.
Long held short positions are being sacrificed to compensate for stock losses. You win some, you lose some.
Commodity currencies collapse
Infectious contagion is ruling the market.
As stock indices collapse, commodities soften leading to a rout in commodity currencies.
The market now waits nervously for the Chinese authorities to restore order, but can they.
Action is required quickly or else a rerun of the Asian collapse of the 1990's is just around the corner.
2 years ago the Aussie dollar at its peak yielded just 1.40 per pound. Compare that to today's rate close to 2.20 a movement of over 35% and one can begin to understand the severe downgrading that commodities have suffered.
This must call in to doubt the whole rationale of world economic recovery.
Rate rises what rate rises?
The betting for a fed rate rise next month has fallen from 52% to 21%.
Who are these 21%?
Unless we see an unbelievable rally in stocks commodities et al it would beggar belief that the Fed in the face of such economic uncertainty would put up rates.
We hear indeed this morning that a leading British clearing Bank has just put their forecast of a Fed move back to March next year.
Almost irrelevant in a market as febrile as currently, Germany has just confirmed that its second quarter GDP growth was indeed 0.4% for the quarter and 1.6% year on year.
Provided that Tsipiras wins his election and that Chinese contagion becomes isolated it is likely that German GDP will improve as we head toward 2016 and QE has a positive impact on the economy.
Just announced, Ifo business confidence for August at 108.3 slightly ahead of forecasts. A raft of statistics from the US this afternoon are all expected to be a touch negative, putting further doubt into the Septemberists.
Threat or opportunity?
The greatest/luckiest investors often buy into panic. So is this a good buying opportunity or not?
It doesn't feel like it yet and more volatility can be seen yet.
Rumour has it that flash traders caused the Dow to open 1,000 points down yesterday.
Is technology our nemesis?
On the other hand if it looks good take advantage.
Last week Euro sellers were looking at $1.43. Yesterday some savvy punters secured $1.35.
» For more see Stock Market Trading News & Analysis.
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.
Interest Rates Spread Betting, sponsored by FinancialSpreads.com.
You can spread bet on Interest Rates with
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:
'Interest Rates Spread Betting' edited by Jenna Cutly, updated 22-Feb-17
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