when volatility strikes the bond markets traders turn to interest rate futures to hedge risks or speculate on where interest rates will head 
an interest rate future is a contract with an underlying instrument that pays interest the contract is an agreement between the buyer and seller for future delivery of any interest bearing asset the interest rate futures contract lets traders lock in the price of the interest bearing asset for a future date as of january 2024 they were the second most popular type of futures contract after equities 1understanding interest rate futuresinterest rate futures have underlying instruments like treasury bills t bills with futures traded on the chicago mercantile exchange cme or treasury bonds t bond with t bond futures traded on the chicago board of trade cbot a division of the cme other products such as certificates of deposit cds treasury notes and ginnie mae securities are also available to trade as underlying assets of an interest rate future the most popular interest rate futures are the 30 year 10 year five year and two year treasurys as well as the eurodollar 23participants in the futures market range from large institutional hedgers seeking to mitigate risk on interest rate exposures to speculators aiming to profit from correctly betting on the direction in which rates move these futures contracts change hands daily on regulated commodity exchanges settling prices based on supply and demand 