Think the U.S. Stock Market is the Biggest Market in the World? — You'd be Wrong, and a There is a New Way to Trade It

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Think that the United States stock market is the largest and most liquid market in the world? Not by a long shot. U.S. treasuries are, by far, the biggest and most actively traded market in the world. In 2020, the dollar value amount of U.S. treasuries traded reached an average of over $600 billion per day, handily beating the U.S. stock market figure of an average of $450 billion traded per day — no small feat. 

Until recently, most U.S. Treasury issued or based products were geared toward large-scale institutional investors. This means that U.S. Treasury futures are perhaps not a particularly common piece of a retail trader’s portfolio. However, with the recent creation of “Micro Treasury” futures contracts by derivatives marketplace CME Group, things look like they could be changing.

A Micro Treasury Is Not a Tiny Money Building

Trading US Treasury futures via Micro Treasuries looks to be an easier and more straightforward way for both institutional and retail traders alike. Micro Treasuries are cash settled, priced based directly on yield, and are fixed in duration.

Additionally, to answer questions more in-depth, CME Group provides a very handy and dandy FAQ page right here. 

Some Key Features - from CME Group

• Traded in yield
  • Directly references the most widely followed US Treasury market metric – yields of recently auctioned (or, on the run) Treasury securities – the most followed issues within each tenor.

• Four major benchmarks
  • Trade the most followed points on the curve: 2-Year Notes, 5-Year Notes, 10-Year Notes, and 30-Year Bonds, anchored by BrokerTec US Treasury benchmarks.

• Constant BPV streamlines spreading opportunities
  • All four contracts are sized at a constant basis point value of $10/basis point of yield (0.01%), allowing for streamlined spread trading. Take positions on the rate’s direction or the yield curve’s shape.

• Flexibility of a Micro contract
  • Small BPV enables a low-cost alternative to other interest rate offerings and gives individual and institutional traders more flexibility in managing their benchmark interest rate exposure.

How to Start Trading Micro

Traders can get into CME Group Micro Treasury Yield futures right now on NinjaTrader, TradeStation, Ironbeam, and AMP Futures. Additionally, CME Group’s full broker directory can be found here. 

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.