Hi, What is the difference between a bond future and an interest rate future? These seem like the same thing whereby it's a commitment to buy/sell the debt product at a price in future that thus makes you a profit/loss on movements of interest rates. Is it just that "bond" is long-term and "i/r future" is short-term, using bills?
Yes - if you buy a bond future, you make gains and losses when the long bond price moves. It can be used to hedge bond portfolio exposure. Short term interest rate futures hedge 90 day interest rates (LIBOR). You can get them based on the 90 day interest rate in a few months time, or in a few years time, but it is always a 90 day interest rate you are betting on. Used to hedge the cost of floating rate borrowing.
