30yr T-bond vs. 10/5 yr T-Note

Discussion in 'Financial Futures' started by FT79, Mar 20, 2008.

  1. FT79


    Hi All,

    When reading books about trading the US bond markets (I’m from Europe) all the big traders trade the T-bond future (market wizards, street smarts, martin schwartz, etc). But when watching the volume of the 10/5yr T-Note they’re app. twice as high compared with the T-bond. Can anyone explain why the volume of the T-bond is so low compared with other interest rate products on ECBOT?

  2. ycomp


    could be that the books are a bit old?

    tbonds sure seem more fun to trade. I am new to futures but from what I read apparently US Govt stopped issuing 30 yr bonds or something like that a while ago? But now they issue them again?

    anyhow, these are just some points for you to investigate... as you can see I'm short on specifics 'cause I don't really know what I'm talking about :)

    I just noticed that "liquidity" is low on this board so decided to post, just in case nobody gives you a response.

    Also bund has more liquidity than the 30 yr, but since you are from europe, I'm sure you know about that already.
  3. I made a similar inquiry a few days ago.

    The following is an edited cut and paste of the exchange.

    Hope it helps.



    Youngtrader: " ... To be honest it seems like everyday CBOT treasuries become more and more of a joke. Eurex is the only way to go imo ... "

    Chevy Chase: "... Youngtrader, I'd like to get more of your thoughts regarding the transition of the 30 year bond futures (to being a "joke" - as you said). Always thought it was seriously liquid (to be clear - I would only be trading the day sessions) ... "

    DblArrow: " ... Go back and look backwards in history - check volume before the 30 yr was discontinued, then look at volume while it was dicontinued, then look at volume when it was re-institued and now look at volume with the initiation of 1/64 ticks.

    They done ruined it!! ... "

    More from DblArrow:

    " ... The 10yr has much more volume and open interest than either the 30 or the 5. Not sure how the 5 is doing since its tick was cut in half also. I don't arb so I can't really speak to that. Unless people quit trading the US interest rates the volume will most likely remain in the 10 yr.

    I trade the 10yr almost exclusively - little slow today after the initial morning moves and will also be slow tomorrow until the Fed speaks.

    Hope this helps ... "
  4. FT79


    bund (including Bobl and Schatz) is one of the best Interest products in the world to trade. But because I have to work I can only trade US futures (besides futures I trade DJ Eurostoxx50 index options).

    I have been watching the T-bond vs. 10/5 T-note and in some occasions the swings are better visible in the T-bond but the volume is lower. and volume is very important for me.
  5. FT79


    Hi CC,

    They are talking about the volume of the 30yr, was it much better in the past when the US government issued 30 yr bonds?
  6. ycomp


    well greater time to maturity and also less liquidity makes bond more fun but if the volume is a deal killer then just forget about it and focus on 10 yr. No sense wasting time and energy thinking about how cool it would be to trade something if only the liquidity was greater.
  7. US Treasury dept. already resumed the 30Y auctions but meanwhile most of the players cut the duration of their portfolios to fit the 10Y x better liquidity on cash and futures.

    >>The U.S. Federal government stopped issuing the well-known 30-year Treasury bonds (often called long-bonds) on October 31, 2001. As the U.S. government used its budget surpluses to pay down the Federal debt in the late 1990s, the 10-year Treasury note began to replace the 30-year Treasury bond as the general, most-followed metric of the U.S. bond market. However, due to demand from pension funds and large, long-term institutional investors, along with a need to diversify the Treasury's liabilities - and also because the flatter yield curve meant that the opportunity cost of selling long-dated debt had dropped - the 30-year Treasury bond was re-introduced in February 2006 and is now issued quarterly. This will bring the U.S. in line with Japan and European governments issuing longer-dated maturities amid growing global demand from pension funds. Some countries, including France and the United Kingdom, have begun offering a 50-year bond, known as a Methuselah.
  8. 50-year and 100-year bonds tend to be a good indicator of long-term tops in the bond market. Be on the lookout for the biggest blue-chips to issue them in the near future, i.e. KO, IBM et al.