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Are Interest Rates the New Crypto?!

by Frank Kaberna| Tips & Strategies

Interest rate markets aren’t “new” or “in vogue” or “what Elon Musk is tweeting about,” but they are moving. Just two months into 2021, ephemeral infatuations with Shiba Inu-based cryptocurrencies and video game retailers have subsided, but yields have continued to keep pace with more enduring trends like the bullish run in Bitcoin.

What is new? Small Yield Curve futures that provide three flavors and an overall simpler experience when trading interest rates. The Small Exchange has launched Small 2YR, 10YR, and 30YR Treasury Yield futures that give the everyday trader easier access to an oldie but a goodie in interest rates.

The Single Scoop

Traditionally, the yield curve is upward sloping, which means shorter-term rates are lesser than longer-term rates. This is the current case in the US when you compare 2YR yields of 0.11% to 2.06% in the 30YR ($1.10 and $20.60 in S2Y and S30Y, respectively).*

Size and Margin for Small Yield Futures†
 S2Y S10Y S30Y
$110 $1,300 $2,060
$102 $180 $325

And thus the three yield flavors from the Small Exchange come in three sizes! Is the bowl of S30Y too large? Check out S2Y! On their own, Small Yield products let you speculate on the future landscape for interest rates in general.

Stocks are expensive. Traditional futures are complicated. The Smalls are a new kind of product that pairs the efficiency of futures with the clarity of stocks. Check out The Small Exchange now>>

The Sundae

Is one yield not enough? The world of flatteners and steepeners can be an exciting one, and now it’s a straightforward one thanks to the Smalls. Yield-based futures with the same multiplier ($100 for Smalls) make DV01 and trade ratios a thing of the past.

Whether it ends up being interest rate markets versus the Fed or Elon Musk or even a Shiba Inu, one thing is for certain: this age-old asset just got a major facelift.

Bitcoin and 10YR US Treasury Yield(coin)

Source: dxFeed Index Services (https://indexit.dxfeed.com)

*Treasury yields (https:/treasury.gov) and index values (https://indexit.dxfeed.com/) taken on 2/17/21
†Product size and initial margin from Small Exchange taken on 2/17/21

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To learn more about how the Small Exchange is merging the efficiency of futures with the clarity of stocks, make sure to subscribe to their YouTube channel and follow them on Twitter so you never miss an update.

© 2021 Small Exchange, Inc. All rights reserved. Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information in this advertisement is current as of the date noted, is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading futures involves the risk of loss, including the possibility of loss greater than your initial investment.

About Frank Kaberna

Frank Kaberna is the head content strategist at the Small Exchange. He produces everything from brochures to videos that inform on the Small Exchange’s products. After earning a mathematics degree from the University of Michigan, Frank traded interest rates at the Chicago Board of Trade. He then worked on the tastytrade Network as a content producer and on-air talent before landing at the Small Exchange.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

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