Sunday, February 18th 2018

Question

How to short treasury bonds?

Interesting Question?   (7)   (4)



Answers (1)

17th Nov 2009 by Michael Haltman

Shorting treasury bonds is a bet that prices are going to go down and yields are going to rise. Because the typical issue of bonds is extremely large with good liquidity, an investor can go to their broker and say that they want to short treasury bond xyz with CUSIP number xxxxxxxxxx. It is the cusip number that is the true identifyer for the bond, not the coupon and maturity because there can be more than one issue with the same characteristics.

Once the bonds are sold or shorted, at some point in the future the investor will go back into the market to buy the bonds with the same cusip and close out the trade. The risk to an investor is that for some reason that cusip is not available in the marketplace, in which case the holders of those bonds have to be approached and offered a price for their bonds. This can be what is known as a short squeeze.

An alternative way to short the treasury market would be with treasury futures.

Like This Answer?   (0)   (0)
This answer is the subjective opinion of the writer and not of FinancialAdvisory.com



1st Nov 2009 In Bonds 1 Answers | 639 Views
Subjects: bonds, treasury bonds,

Answer This Question / Give Your Opinion
How to short treasury bonds?


Answer: *

What country is this answer relevent to? *
Your Name: *

Enter Verification Number: *


Give Your Opinion
What to do with 401k?
Share a simple answer to help inform others:
Specific to any country?
First name / Alias

• Your answer will be posted here:
What to do with 401k?
Unanswered Questions in Bonds
How to read bond prices?
What are the different types of short term bonds?
Why invest in bonds?
How risky are bonds?
What is the municipal bond secondary market?

Answered Questions in Bonds
What are the different types of investment bonds?
What are municiple bonds?
What are the advantages of treasury bonds?
What is a junk bund?
Where are corporate bonds traded?
Ask A Question
Get opinions on what you want to know:
Specific to any country?