CME Group has reported a sharp increase in credit futures contracts, noting nine consecutive days of increases in active, unsettled contracts.
The US credit futures provision was launched in June, aiming to give investors better exposure to and management of credit component risk through futures on Bloomberg’s duration-hedged index. Contracts are based on the Bloomberg Corporate Index and the Bloomberg US High Yield Very Liquid Index.
READ MORE: CME’s US corporate bond index futures to launch 17 June
CME Group recorded the market’s first major block trade on 5th August, when 100 contracts were executed. This implies burgeoning confidence and interest in credit futures contracts, it stated.
Alongside this hike, CME has drawn attention to upticks in investment grade bond futures. From around 100 towards the end of July, Bloomberg data has recorded more than 700 active contracts as of 6th August.
READ MORE: CME Group reports first week US credit futures trade count
The same has been seen, to a lesser degree, with high yield bond futures, which have grown by approximately 150 contracts over the week. The number of duration-hedged bonds, used to manage interest rate risks and focus on credit exposure, has also jumped by more than 100.
Sudden interest in credit futures trading comes alongside recent concerns of the health of corporate debt markets, and unease around widening credit spreads between corporate and government bond yields.
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