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Spread Bet Markets - Bonds

  • Spread bets are offered on government Bonds such as UK Gilts, the US Treasury Bond and 10 year Treasury Notes, and German Bunds
  • Not only can these be a speculation on the bond prices themselves, but also on interest rates
  • Simple economics states that if interest rates rise, bond prices go down, and vice versa
SPREAD BET BOND CONTRACTS
Gilts - UK Government bonds
Treasury Bonds - US 30 Year bond
Treasury Notes - US 10 & 5 Year bonds
Bund - European (Euro currency) 10 Year bonds
JGB - Japanese 10 Year bond

Example - European Bund Spread Bet

  • You expect interest European rates to be higher over the next few months
  • The current spread bet quote for the European Bund is 110.10 - 110.15 (1 point is 0.01)
  • You therefore sell short £5 a point on the bid price, 110.10 (although Bunds are actually prices in Euros, the spread bet profit/loss and bet size is paid out in Sterling
  • You are correct in your view and a month later the spread betting company quotes you 108.75-108.80
  • You take your profit by paying the spread bet offer price of 108.80
  • Total profit is 110.10 - 108.75 = 135 points x £5 = £675 TAX FREE

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