How big is the UST cash bond market vs UST futures?

Discussion in 'Financial Futures' started by Daal, Sep 29, 2018.

  1. Daal

    Daal

    I mean, in terms of daily/weekly/monthly volumes
     
  2. comagnum

    comagnum

    The bond market is about 25% larger than the stock market. The futures market is significantly smaller than either of these.
     
  3. sle

    sle

  4. sle

    sle

    What makes you say so? 10y note futures trade about 2-3 million contracts on an average day, which makes 200 to 300 billion (notional is a 100k). Once you add the 2s, 5s, bonds and ultra-bonds, you probably get to the same dollar volumes. Also note that more than 20% of cash bonds traded are short-dated, so in terms of total duration futures actually outsize the cash market.
     
  5. comagnum

    comagnum

    The bond market is significantly larger than the stock market in the volume of cash traded

    The stock & bond markets are far larger than the Futures market in the volume of cash traded. Forex dwarfs both of these markets.

    Market size has always been measured in the real cash volume - not on the leverage/notional.

    Derivative markets are always much smaller than the spot market they are derived from.

    upload_2018-10-8_18-44-11.png


    upload_2018-10-8_18-27-51.png
     
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  6. sle

    sle

    Dude... what are we, in 3rd grade here?

    (a) Daal is asking specifically about "UST cash bond market vs UST futures". SIFMA is the most reliable source for this information this information (as opposed to some pretty memes from the internet). It's pretty obvious that in terms of duration exchanged, futures are more liquid.

    (b) in the world where any grown-up market player has access to leverage away from the market, "volume of cash traded" is about as meaningless as notional. An average HFT market maker is far more leveraged during the day than a guy who's trading spooz. What matters is the amount of risk that is being transferred between the participants.

    (c) Derivatives markets are not always smaller than than the underlying product. At the extreme, commodities markets have far less flow in the physical product than the futures markets.
     
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  7. luisHK

    luisHK

    Lol ! I might be spending too much time with the kids' homework, found Comagnum's post instructive !?!
     
    Last edited: Oct 9, 2018
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  8. tiddlywinks

    tiddlywinks

    Hmmm... this is really strange.

    I found @sle's response more instructive. And in tune with the OP's question too! No offense @comagnum.

    Could it be this thread epitomizes the purpose of ET?
    Nah. Screw that! Where is @destriero?!?
     
  9. luisHK

    luisHK

    Nothing that dramatic, i just liked Comagnum s graphics, agree abt Sle's post.
     
  10. Daal

    Daal

    Tks for these figures, it was what I was looking fo
     
    #10     Oct 9, 2018