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Bond Baba #4: The Interest Rate Futures [Video]


We have started a video series on bonds, where we’ll explain the bond market and its nuances in an ELI5 format. This is the 4th part of the Bond Baba video series.

Bond Baba #1: An introduction to bonds
Bond Baba #2: G-Secs, Tax Free Bonds and 54 EC Bonds
Bond Baba #3: Convertible, Callable, Puttable, Floating Rate, and ZCBs

In today’s video, we will talk about an an insanely leveraged interest rate futures product.

But why?

Between 2014 and 2017, the 10-year bond yields (India) fell from 9% to 6.25%, and then went back to 8% by end-2018. They are now back to 6.78%. Bond prices, meanwhile, moved massively.

Can we make money from such a trend? And secondly, can we also make money when the yields rise?

The answer is interest rate futures!

(Read our detailed post on the Interest Rate Future)

(Subscribe to our YouTube channel for more videos)

That’s all for now folks but we will discuss a lot more in this series in the subsequent videos. You can find me on twitter @AstuteAditya


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