5-Year T-Note Futures Futures

Looking out to bonds with maturities of five years, traders, pension funds, banks and others can hedge their bond exposure with a 5-year T-note futures contact. The 5-year futures offers deep and liquid markets that can be traded against other points in the yield curve, and also other asset classes.
The Federal Reserve Bank influences 5-year notes, like all other interest rate markets. And when that occurs, it can provide traders with opportunities in terms of taking a position on the direction of 5-year rates, but also hedge against severe downside risk. And that risk may not only be on the interest rate exposure in a portfolio. Hedging against adverse moves in the bond markets may help offset some of those negative price shifts.