What does the price on 2 year treasury note futures mean? | Forex Factory

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What does the price on 2 year treasury note futures mean?

  • #1
  • First Post: Sep 19, 2013 9:19am Sep 19, 2013 9:19am
I read the CME page about the contract, but I still don't get what the actual number means.

it is quoted like this: 110'017 (the two decimal places after the apostrophe are 32nds, while the next decimal place is quarters of 32nds)

so this price of 110'017 would mean 110 and 1/32 and ((3/4)/32)
each point (place in front of apostrophe) is $2000, and the minimum tick is on quarter of 1/32 ($2000/32/4) or $15.625/contract/tick

But what does the price quote actually mean? what does the 110 mean in reality?

on the 30 day fed funds futures, the price is 1-(rate) so 99.98 would mean you get .02% APR on a $5,000,000 note

I just don't understand what is meant by 110'017, can you help me understand?
  • #2
  • Sep 22, 2013 1:48pm Sep 22, 2013 1:48pm
Quoting deltaskelta
I read the CME page about the contract, but I still don't get what the actual number means. it is quoted like this: 110'017 (the two decimal places after the apostrophe are 32nds, while the next decimal place is quarters of 32nds) so this price of 110'017 would mean 110 and 1/32 and ((3/4)/32) each point (place in front of apostrophe) is $2000, and the minimum tick is on quarter of 1/32 ($2000/32/4) or $15.625/contract/tick But what does the price quote actually mean? what does the 110 mean in reality? on the 30 day fed funds futures, the price...

I can likely explain this to you - can you provide me with the link you are reading please - at least so I know how to decipher the info.

Or I can just give you the short answer, Bond traders, trade, and use ultra low price movements, LIKE FX, with leverage of some sort, to trade,
Investors, buy and hold till the T-Bill maturers getting paid back by the FED, T-Bills do NOT work the way that some other such as "coupon bonds" do.

Because the "INVESTOR" is supposedly "guaranteed" payment by the maturity they DON'T really CARE what the MAJOR dollar level of the T-BILL is.
They just want their PROMISED money by MATURITY.

Traders, DO, because they make money on the INFLUX and OUTFLOW on speculating via T-BILLS.
XAU-XAG/USD_Gold n Silver Trader's Thread = Technicals, Fundamentals & News
  • #3
  • Sep 22, 2013 2:02pm Sep 22, 2013 2:02pm
http://www.cmegroup.com/trading/inte...sury-note.html

I take it this is the link - yes?
need to wait for market to open..


READ ABOVE POST BEFORE THIS>>^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
XAU-XAG/USD_Gold n Silver Trader's Thread = Technicals, Fundamentals & News
  • #4
  • Sep 22, 2013 6:20pm Sep 22, 2013 6:20pm
yes the same site, just click on contract specifications. (http://www.cmegroup.com/trading/inte...fications.html)

I understand that those are highly leveraged to take advantage of the tiny movements in price, but I just want to know what the actual numbers mean. Commodities like gold or corn are usually pricePerUnit and then a contract is for X units. Coupon bonds are 1-interest on a certain notional amount. But I can't make out how these things are quoted and what the numbers really mean.
  • #5
  • Oct 22, 2013 2:55am Oct 22, 2013 2:55am
You perceived it right to the most part of it. 110 is the current price trading and the price difference might benefit traders. But if someone entered the contract,
price difference has nothing to do with it. Treasury Bills are different from other securities.
  • #6
  • Last Post: Oct 22, 2013 7:16am Oct 22, 2013 7:16am
Quoting deltaskelta
I read the CME page about the contract, but I still don't get what the actual number means. it is quoted like this: 110'017 (the two decimal places after the apostrophe are 32nds, while the next decimal place is quarters of 32nds) so this price of 110'017 would mean 110 and 1/32 and ((3/4)/32) each point (place in front of apostrophe) is $2000, and the minimum tick is on quarter of 1/32 ($2000/32/4) or $15.625/contract/tick But what does the price quote actually mean? what does the 110 mean in reality? on the 30 day fed funds futures, the price...
You don't really need to understand it to trade it.
The key point is that treasuries have a coupon which is nominally fixed eg x% per 6 months for the duration of the treasury (be it note, bond, whatever).
They also have a yield which is not nominally fixed and which moves inversely to the price.
If you were actually buying treasuries for the coupon you'd have to work all this guff out.
Otherwise, you're just doing what 99% of people do and buy sell buy sell etc etc., holding for hours or days.
Basically, they're just a bet on whether interest rates are going to go up, or go down. That's all there is to it.
Well of course there's a lot more to it than that, but at the end of the day, it's just a price chart like any other. When the price goes up, the yield is going down, and so it's all risk on, buy stocks, woo-hoo. When the price goes down, the yield is going up, and it's all, woooh, tapering is coming, it's gonna kill the recovery, batten down the hatches! Risk off , sell stocks! etc etc. Ad infinitum.
You get the idea.
I have no clue what I'm talking about.
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