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German Bund Investing

German Bund Investing

Instrument- GERMAN BUND

Minimum spread- 0.2

Typical spread- 1.8



Minimum nominal trade size- 1000

Overnight interest (annual) sell- -0.60%

Overnight interest (annual) buy- -0.1.70%

Trading hours (GMT) – 24*5

GERMAN BUND Market Overview

The German Bund futures are interest rate futures contracts in which the underlying asset is a notional long-term German federal government bond (Bundesanleihe). Interest rate futures are financial derivative contracts in which the contract holder is obligated to buy or sell the specified government bond on a specified date at an already agreed price. They are standardized financial products that trade on the futures exchange market, with the prices and settlement dates determined at the time the futures contracts are purchased.

Understanding the GERMAN BUND

A German federal bond (Bund for short) is a bond issued by the Federal Republic of Germany as a government bond. In addition to short-term borrowing from banks, federal bonds and other federal securities are a way in which the federal government can finance its government spending if necessary.

A federal bond has a maturity of around 10 or 30 years when issued, making it the longest-running federal security. In 2020, due to the significantly higher need for loans, federal bonds with maturities of 7 and 15 years were issued for the first time. German government bonds have a fixed annual interest rate (coupon). As with all interest-bearing securities, the stock exchange listing is carried out as a percentage of the nominal value (nominal value). At the end of the term, German government bonds are repaid at full nominal value. The currency is usually the euro, although in 2005 and 2009 the federal government already issued bonds whose interest and repayments were made in US dollars.

Factors to keep in mind while trading GERMAN BUND

  • Interest Rates: In general, when interest rates rise, bond prices fall. When interest rates fall, bond prices rise.
  • Political events: Investors see the German Bund as a safe-haven instrument to protect their capital when there is a major political or social event that they believe is bad for the economy. Hence, when there is bad news, German Bund prices tend to go up.
  • Inflation: In general, when inflation is on the rise, bond prices fall. When inflation is decreasing, bond prices rise. That’s because rising inflation erodes the purchasing power of what you’ll earn on your investment. In other words, when your bond matures, the return you’ve earned on your investment will be worthless in today’s dollars.


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