New 20-year Treasury bond futures start trading today, two years after the government launched the underlying securities.
The new contracts will control $100,000 of face value, with quarterly expirations. Its symbol root will be TWE. The first contract is dated for June (TWEM22). They will trade in fractional increments of 1/32 of a point, with each tick worth $31.25. The new product will also have physical delivery. More information is available on TradeStation’s margins page.
Futures contracts track the price of an underlying asset, letting investors hedge against volatility. CME is offering the new product after the U.S. Treasury resumed issuing debt with 20-year maturities in 2020. The government has sold more than $400 billion of the securities, which has created demand for the new futures product. (Twenty-year bonds previously existed, but were phased out in 1986.)
TWE will join other CME Treasury futures like the contracts tracking five-year notes (@FV) and 10-year notes (@TY). There’s also the longer-dated Treasury bond futures (@US), which track securities expiring in 15 to 25 years. TradeStation clients with futures accounts can access the products across the desktop, mobile and web platforms.
The new products also come at an active time for the bond market, with the Federal Reserve planning to increase interest rates several times this year.
Note: Treasury prices move in the opposite direction as yield. They typically lose value when rates increase, although different maturities fluctuate separately.