New to Interest Rates?
Spread bet on the future short or long-term direction of interest rate and bond markets.
In order to spread bet effectively on interest rates, it is important to understand how the market works – particularly how prices are quoted.
There are two types of contracts you can spread bet with us on: short-term and long-term interest rates.
Short-term interest rates
Short-term interest rates are one of the most popular and liquid financial markets in the world.
These contracts allow you to back your judgement on the direction of a currency's short-term (three-month) interest rates.
Long-term interest rates
Long-term interest rates are reflected in the price of government bonds, so by taking a position on a government bond you are speculating on the direction of interest rates.
Bond futures allow you to spread bet on the direction of long-term interest rates in various countries.
Since bond prices rise when interest rates fall, you would 'buy' these contracts if you expected the relevant interest rates to fall and 'sell' if you expected rates to rise.
The price of the contract is always 100 minus the relevant interest rate.
A price of 98.5 means an interest rate of 1.5% (100 - 1.5) and a price of 97 (100 - 3) implies an interest rate of 3%.
The way spread betting works on interest rates is different to spread betting on other markets: you 'buy' if you think interest rates are going to fall and 'sell' if you think they're set to rise.
This is because when you buy an interest rate futures contract you are effectively looking to lock in an investment rate – you stand to gain if interest rates fall (the price of your future will rise) and vice versa.
To gain a better understanding of how spread betting on both short-term and long-term interest rates works, please see our examples.
Interest rate markets
We offer a range of short-term interest rates to bet on, including US interest rates with our Eurodollar contract, UK interest rates with Short Sterling and eurozone with Euribor – as well as a whole host of other short-term rates.
Take a view on long-term interest rates in the US with our Treasury Bond contract, and gain exposure to UK rates through our Long Gilt contract or to Euro rates with our German Bund contract.
Spread bets are leveraged products. Spread betting may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.