Hi @Hucksandholt
I found this article, maybe interesting.
Bonds are nothing but loans issued by governments or corporations. So when you buy a bond, you lend money to the government or a company and in return you get a tradable debt instrument. Unlike shares, with a bond in possession, you do not become a co-owner of the issuer. This debt instrument does entitle the holder to compensation. The fee for lending money, the interest, is usually paid periodically (for example annually). This is also called coupon interest. The maturity of bonds varies from 1 to 99 years.
In the case of US Government bonds, a distinction is made between Treasury Bills, Notes and Bonds. Treasury Bills refer to bonds with a maturity of less than 1 year. Notes refers to bonds with maturities of 2 to 10 years. The Bonds are the longest loans and often have maturities of 20 and 30 years.
Good to remember is that bonds and interest rates move opposite to each other. This means that the bond rises in value when interest rates fall. If, on the other hand, interest rates rise, the value of the bond will fall to compensate for this difference.
Since the probability of the U.S. government going bankrupt is negligible, the interest rate on the 3-month U.S. Treasury Bill is also known as the risk-free rate. This is the return that investors can achieve risk-free with the purchase of a government bond.
Bonds are always part of a well-diversified portfolio for (smart) investors. For the somewhat smaller investor, and certainly the trader, the bonds are less interesting. Still, as a trader, you can take advantage of the movements in the US 10-year yield. There is a future available on the 10-year US Treasury note. These can be found in the trading platform with the ticker: ZN. For the seasoned trader, there are also options available on these interest rate futures.
The interest rate future is issued by chicago board of trade (CBOT) in partnership with the CME Group. The underlying value of the future is of course the 10 Year Us Treasury Note. The interest rate futures have a multiplier of 1000 and thus each point of movement of the bond represents a value of $ 1000.
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