Bonds Trading

Take a position on markets like UK Long Gilt, Euro Bund and US T-Bond, all featuring tight spreads.

Trade CFDs on UK, US and European bonds and take advantage of deep liquidity in Bond markets.

  • Spreads from just 0.02 points
  • Range of 12 Bond markets
  • Bond margins from 0.25%
Trade major Bonds with a 0.02pt spread in market hours.

Why trade Bonds with City Index?

Global Opportunities

Trade 12 Bond markets

From Europe, the UK, Asia and the US

Tight spreads

0.02 spread on US T-Note, T-Bond and Euro Bobl

Low margins

Trade Bonds with up to 400 times leverage

Choice of products

Speculate on Bonds by CFD Trading

Trade wherever you are, on our fast, reliable platforms

Customisable charts

16 chart types with 80+ indicators designed to help you perform technical analysis

Powerful platforms

Our powerful technology is designed to suit you, whatever your level of trading expertise

Actionable trade ideas

Our research portal highlights trade ideas using fundamental and technical analysis

Trade anytime, anywhere

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With fast, reliable execution and tight spreads, here's why our clients choose
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Over 30 years' experience in Forex and CFD Trading
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Why Trade Bonds?

Global Opportunities

Diverse range of markets

Trade on a wide range including UK, US, Europe and Asian Bond markets

Diversify your portfolio

Trade Bonds to diversify your investment portfolio and manage risk

Commission free Bond CFDs

Commission free trading on all CFDs except Shares

Fast moving markets

Bond markets underpin the global financial system and are liquid markets

Short the markets

Trade on falling markets (going short) as well as rising markets

Trade anytime, anywhere

Trade on desktop, close on mobile, our accounts work on multiple devices
CFD Trading with City Index

How to trade Bonds

Bond markets offer traders deep liquidity with a high volume of trades placed daily. They underpin the global financial system and allow traders to diversify their investment portfolio.

Because Bond markets are driven by economic performance and geopolitical risk, careful analysis and an understanding of the markets can help identify trading opportunities. If you think a Bond market will rise in value you can buy or go long on that market. If, however, you think the price of a market may fall, you can sell or short that market.

How to trade bonds

Learn to Trade Bonds

What is CFD Trading?

Learn to trade Bonds using our CFD tutorials

How to trade CFDs

How to analyse markets

How to identify trading opportunities using City Index's research tools

Research tools

How to manage risk

Learn techniques to improve your trading and manage risk effectively

Risk management
Trade major Bonds with a 0.02pt spread in market hours

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Open an account to begin Trading Bonds

What are Bonds?

Governments and companies frequently need to raise finances in order to finance new investments and projects. Rather than taking a loan, they can issue bonds.

A bond is a debt investment where an investor loans money to a company or Government for a defined period of time for at an agreed interest rate.

They are different from shares because they pay interest and do not provide a stake in the issuing organisation.

How Bonds work

Investors lending to governments or companies can buy the bond and in return every year the bond will pay interest. This is often referred to as the coupon.

Bonds have a maturity date – this is the date when the government has to pay back the principal, the original amount it borrowed. Government bonds are issued with a range of maturity dates, from short term bonds to those which have a 30-year lifespan.

Bonds are debt securities which can be traded amongst investors. The market price of the bond will depend on a number of factors including the credit rating of the issuer, the length of time until maturity and the coupon rate compared to current interest rates. When someone sells a bond at a price lower than the face value, it's said to be selling at a discount. If sold at a price higher than the face value, it's selling at a premium.

Bond trading example

A 10 year bond is issued with a 6% coupon value. If interest rates were to rise to 7%, the 6% coupon value is below the current market rate nad not an attractive option for investors. The bond price will decrease and will sell at a discount.

If interest rates were to fall to 3, the bond will continue to pay at 6% and will be an attractive option for investors. The price of the Bond will increase and sold at a premium.

How are Bonds issued?

Bonds are usually issued in a bond auction. Most government bonds are bought at auctions by primary dealers such as large banks and financial institutions. Buyers of bonds include banks, pension funds, foreign governments and individual investors.

Where are Bonds traded?

Corporate and government bonds can be traded publically on exchanges. They are often traded over-the-counter (OTC) – this means they are generally traded between dealers, acting on behalf of clients.

Government Bonds explained

Governments and companies frequently need to borrow money from the markets and do this in a number of ways. Rather than taking a loan they issue bonds, debt securities that can also be traded between different parties. They are different from shares because they pay interest and do not provide a stake in the issuing organisation. They are really pieces of a structured loan.

How Bonds work

Bonds are debt securities – governments and companies use them to borrow money to fund projects or expansion plans. Anyone lending to governments or companies can buy the bond and in return every year the bond will pay interest. This is often referred to as the coupon.

Bonds also have a maturity date – this is the date when the government has to pay back the principal, the original amount it borrowed. Government bonds are issued with a range of maturity dates, from very short term bonds to those which have a 30-year lifespan.

There are a number of major bond markets that are popular with traders:

In addition, companies and local governments (municipalities) issue bonds. There are thousands of individual bonds issued on the market at any one time.

How are Bonds issued?

Bonds are usually issued in a bond auction. Most government bonds are bought at auctions by primary dealers like large banks. Buyers of bonds include banks, pension funds, foreign governments and individual investors. 

Where are Bonds traded?

Bonds can be traded and the market for bonds is wide and diverse. Corporate and government debt is mainly traded in the over-the-counter (OTC) market – this means they are generally traded between dealers, acting on behalf of clients.

When someone sells a bond at a price lower than the face value, it's said to be selling at a discount. If sold at a price higher than the face value, it's selling at a premium.

Bond ratings

Independent ratings agencies exist to provide a rating to bond issues: a rating is an indicator of risk – how likely is it that a borrower will default and fail to pay the bond at maturity?

Only the most secure bonds attract the top ratings. Even large governments may only have AA or A ratings.

What is a junk Bond?

A junk bond is a much riskier, high yield bond, often issued to raise short term financing. These are not investment grade – i.e. the risk of default is considered much higher. 

What drives bond prices?

  • Demand for bonds on the part of long term investors, particularly institutions
  • The supply of bonds – how many new bonds are coming onto the market?
  • Bond ratings, particularly if these are upgraded or downgraded
  • Interest rates being paid by banks
  • The state of a country’s economy, including how much it is borrowing, and whether the market thinks it will be able to pay its debts
  • Whether the equity market is seen as too risky – historically, the bond market was regarded as a safer place to invest. This has changed since countries like Greece are in danger of going bankrupt
  • How long a bond has to go before it is redeemed (the principal is paid back). This will influence the price, as investors will know how much more they can expect in terms of interest payments

Trading Bond markets with City Index

  • City Index offers CFD trading on bonds
  • We offer competitive spreads on a range of bond markets, including US bonds, Euro Bunds, UK Gilts, Euro Schatz and US T-Notes and T-Bonds
  • Our spreads for bonds start from just 0.02 points