5 year Treasury (Expiring Future)

The 5-Year Treasury Future was created to keep track of the movements and performance of US Treasury Notes that have a maturity of five years. The 5-Year Treasury is frequently used as a reference point for determining interest rates for other securities, such as corporate bonds. The underlying asset of the future incorporates a delivery bond basket that defines the range of bonds that can be delivered by maturity, and maintains the integrity of futures prices by ensuring that they are very closely tied to the prices of U.S. government bonds and their yields (interest rates). The market pricing of futures contracts is generally based on the cheapest to deliver (CTD). This is the cheapest security that can be delivered in a futures contract to satisfy the contractual obligations - usually at a certain rate and within a certain maturity range. The 5-Year Treasury is based on recent auctions of US Treasury notes that mature in five years. To raise funds for a range of capital projects, including infrastructure improvements, the US Government sells debt assets such as US Treasury bills, notes and bonds through the US Treasury. Treasury notes can be purchased with either a competitive or non-competitive bid. A competitive bid involves the investor specifying the yield they will accept, whereas with non-competitive bids the yield is determined by auction. The price and yield have opposite correlations. The yield is boosted by falling prices and a rise in price causes the yield to lower. Managed by Bloomberg Professional Services, the 5-Year Treasury Future acts as an indicator of how investors feel about the current economic environment. Treasury notes pay interest on a semi-annual basis until the note matures, at which point the Treasury pays the par value. Treasury notes are sold in multiples of $100. Follow changes to the 5yUS Treasury Future by adding it to your eToro virtual portfolio.