interest rate future


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Interest Rate Futures Contract

An agreement to buy and sell a debt obligation at a certain date at a certain price. For example, Investor A may make a contract with Creditor B in which A agrees to buy a certain number of B's bonds at a certain date for a certain amount. The value of an interest rate futures contract varies according to changes in the interest rates. For example, if interest rates rise, the value of the futures contract falls because a potential buyer will be able to buy another interest rate futures contract with a better interest rate. See also: Plain vanilla swap.

interest rate future

A contract on the future delivery of interest-bearing securities, primarily U.S. Treasury bills (on the Chicago Mercantile Exchange) or Treasury bonds (on the Chicago Board of Trade), although contracts on certificates of deposit, Ginnie Mae certificates, and Treasury notes are also available. As with other futures contracts, interest rate futures permit a buyer and a seller to lock in the price of an asset (in this case, a specified package of securities) for future delivery. The contracts are large in amount ($1 million for bills and $100,000 for bonds) and lend themselves to sophisticated analysis. Amateurs beware!
References in periodicals archive ?
Although numerous uses of interest rate futures contracts exist for life insurers, this analysis will be limited to three: portfolio management, future cash flow management and life policy management.
UK-based Standard Chartered (LSE: STAN) has announced that it has completed one of India's first interest rate futures transactions in the new form with the National Stock Exchange.
Detroit got involved in trading interest rate futures, and once it was in it couldn't turn back," writes Gray.
interest rate futures also suggested that investors were betting rates would stay low well into 2014, reflecting the Fed's view on interest rates.
In addition to these IRRI rice, Palm Olein and Kibor interest rate futures are also listed and traded on NCEL.
Similarly, it is believed that yields on short-term interest rate futures contracts might rise on speculation that policy makers would lift their overnight interest rate by 0.
Alankit is already providing services to millions of its customers like online trading in equity, future and option segments, commodities, currency derivatives, interest rate futures, portfolio management, depository participant, registrar and share transfer agent.
INTEREST Rate Futures ( IRF) provide an opportunity for individual fixed deposit investors, home or auto loan borrowers with somewhat large exposures to hedge their bets.
According to interest rate futures, investors are no longer expecting a euro zone interest rate hike this year, and they predict no lowering in the cost of borrowing, either.
Following the ISM report, short-term interest rate futures fully priced a 50-basis-point cut from the Fed at its next meeting on March 18 and started to factor in a small chance of a 75-basis-point rate cut.
While a further quarter point reduction is widely expected, interest rate futures prices imply a small probability that rates will be held steady.
Sterling fell against dollar and interest rate futures rose after the data which came alongside a weaker than expected services sector survey, indicating that the economy is softening in the wake of higher interest rates and the credit crunch.