Investing in Government Bonds
When governments want to borrow money from the capital markets, they issue bonds, also called government debt. These are IOUs from the government to the market: the government promises to pay those investing in bonds their full principal, in addition to a rate of interest on the bond that is determined when it is auctioned, e.g. 5.5%.
Some of the most widely traded government bonds are:
What types of Government Bond are there?
Bonds come in all shapes and sizes, but in the world of spread betting and Contracts for Difference, companies tend to quote prices on the biggest bond markets, such as US Treasuries, UK Gilts, German government bonds, and Japanese government bonds (JGBs). The most popular maturities (the time between when the bond is issued and when it is redeemed – its effective lifetime) are the 10 year bonds. These are often referred to by analysts as the ‘benchmark bonds’, the bond whose price is most closely followed by the market.
German government bonds are called Euro Schatz (short term two year bonds), Euro Bobl (five year bonds), and Euro Bunds (bonds from nine years all the way out to 30). Some spread betting companies will quote prices on shorter term bonds from other countries, for instance two year and five year notes. Governments are in the habit of issuing short term debt because some of their costs are short term in nature, too.
What affects the price of Government Bonds?
Prices of bonds will often rise when investors are nervous about equities (shares) or when governments are paying higher rates to raise money, and fall when investors become more interested in shares.
Bond traders focus on statistics like inflation, unemployment and budget statements to try to gauge the financial health of governments, and how much they are likely to borrow in the future. In effect, they are almost treating a country like a company. Tax rates and statements of economic growth (or shrinkage) can move bond markets quickly.
How can I trade Government Bonds?
Using contract for differences or spread bets to trade government bond markets, you can potentially make money if prices go up or down. You also have the benefit of using leverage (trading on margin) to make money on what are really tiny day to day movements in the price of government bonds.
When trading bond markets as a customer of a spread betting or CFD trading company, remember that you are trading the price of the bond, you are not investing in the bond itself. Nobody will pay you the value of the bond when it reaches maturity, or any interest payments. As a CFD trader or spread bettor, you are focusing on the price only.
Government Bond News & Insight
Market holding its breath ahead of Reeves’ Autumn Budget
If Rachel Reeves mishandles the Budget, the verdict from the gilt market will be instant and merciless, say leading wealth managers.
Four scenarios for the UK’s autumn budget
We look at four scenarios of how the Autumn Budget could play out and its impact on UK gilts, with the help of ING analysts
Will the BoE cut rates and what this means for gilts?
Since the release of the UK’s September inflation data, expectations for this week’s Bank of England rate decision have shifted markedly.
Rachel Reeves’ surprise speech: Should investors be worried?
With less than a month to go before her first Budget, the chancellor chose to remind Britons that “there is no magic money tree”.
UK gilts to feel ripples from US government shutdown
How might ripples from the US lending market and the government shutdown spill into gilts and UK corporate borrowing?
It’s time we talked about America’s bond market
The US debt burden is now extraordinary even by its own standards. As of September 4th, total gross national debt stood at $37.43 trillion.
Forex traders are seeking direction on GBP after Labour conference
With no clear steer on the pound after the Labour party conference, the FX market is looking to other signals for sentiment.
How are investors trading the US government shutdown?
How serious is the current federal government shutdown for investors, and which stock market sectors look likely to suffer most?
Financial markets set to take the path of least resistance
Stocks rallied, the dollar caught a bid, and the Treasury curve steepened last week. This week, a much lighter economic docket awaits
UK bonds now look more like an opportunity than a crisis
Is the crisis in the UK gilts market being oversold by investors, and is this creating a golden opportunity for the contrarian trader?
Fed rate cuts: How are traders positioning themselves?
With the Fed widely expected to cut rates this week, whhich markets are starting to look more interesting for traders?
Bank of England continues to reduce its gilts holdings
The BoE’s meeting this week may not result in a rate change, but there are other issues that bond investors will be watching closely.
UK Gilts: What next after yields rise to highest level in three decades?
UK gilt yields have been on the move on concerns over higher-than-expected inflation and weak economic growth.
Treasury curve steepens as politics cloud Fed’s path
The U.S. Treasury curve is steepening at the fastest pace in years, with the 30-year yield rising more quickly than the two-year.
Divisions at the Bank of England: a balancing act
The UK economy heads into the latter half of 2025 facing persistent inflation, fragile growth and intensifying fiscal challenges.
Gilt markets are bracing for a crisis
One of the most significant issues facing this government is rising interest costs against a backdrop of spiralling debt.
Britain’s borrowing blow-out paving way for stealth taxes
Borrowing soared to £20.7bn in June, which is £3.5bn higher than forecast and the largest June deficit outside of the pandemic years.
UK bond markets signal fiscal warning to Starmer government
As memories of the Truss-era crisis remain fresh, the government must move swiftly to avoid further erosion of market trust.
S&P 500 rally rolls on amid deafening headline noise
Stocks hit new records on Friday while the dollar continued to soften, and gold lost its shine. A busy, but holiday-shortened week now awaits
UK retail investors cutting US exposure, buying bonds
13% of UK investors plan to increase their bonds exposure while 8% are considering reducing their exposure to US equities
Silver and US Treasuries are the markets to watch this week
We look at two evolving trades that have been developing quickly in May: silver and long-dated US Treasuries.
Goldilocks Non Farm Payrolls clears the way for new highs
Friday’s ‘goldilocks’ US labour market report elicited a solid risk-on reaction, clearing the way for fresh equity highs
Swiss financial services a ‘no go’ area for Saudi sovereign fund
Large foreign investors say they are shying away from Swiss financial services investments following the 2023 Credit Suisse debacle.
Opinion: The US government faces a $36 trillion question
Jason Hsu, founder and CIO of fund manager Rayliant Global Advisors, asks some hard questions about US national debt.
The prospect of new all-time highs in global equity indices?
The US fiscal position gets more attention, with the House Budget Committee having a second attempt at passing Trump’s reconciliation bill
