June 9 (Reuters) - The CME Groups new micro Treasury
futures will likely attract traders of stocks and other asset
classes as the first contracts at the exchange that are based on
yield moves in the most actively traded Treasuries, an exchange
official said on Wednesday.
The CME on Wednesday said it will launch new micro
futures contracts based on two-year, five-year, 10-year and
30-year Treasuries in August, subject to regulatory approval.
The contracts will be intuitively easier to understand for
non-fixed income professional investors who may otherwise
struggle with its existing Treasury future products, which are
based on prices, said Sean Tully, CME Group Global Head of
Financial and OTC Products in an interview.
The idea here is to have a new product that is yield-based
that is much easier for the typical investor to relate to, he
The micro contracts will be roughly one-tenth of the size of
the CMEs existing Treasury futures contracts. Each basis point
move in the underlying Treasury will be worth $10.
The new contracts will also be the first at the CME to be
based on the so-called on-the-run Treasuries, which are the
most recently issued and most actively traded Treasuries.
That will make it easier for fixed income professionals to
trade the basis between these Treasuries and older issues, which
are known as off-the-runs.
Were giving much greater choice, much greater granularity
and the ability to trade that basis between the on-the-runs and
the off-the-runs, Tully said.
Benchmark Treasury yields have fallen from one-year highs in
March as investors wait for new indications on when the Federal
Reserve is likely to begin tapering its unprecedented bond
The U.S. Treasury has been selling record amounts of debt to
finance widening deficits and as it increases spending in an
effort to stimulate the economy.
(Reporting by Karen Brettell; Editing by Alden Bentley and