Credit Futures Surge Amid Market Transformation

The corporate bond market is rapidly changing, spurred by electronification and a need for more efficient tools. This evolution has fueled unprecedented growth in Cboe® iBoxx® Credit Futures, drawing in a diverse group of investors looking to manage risk and capitalize on market volatility.

Soaring Adoption of Credit Futures

Cboe iBoxx Credit Futures are experiencing significant expansion in adoption. Open interest in IBHY futures has surged by 4.5 times year-over-year, reaching $1.2 billion, while IBIG futures have increased 4.4 times to nearly $600 million. This trend reflects a broader shift in how investors approach risk management.

The growth is driven by end-user demand, as a diverse customer base integrates these futures into their investment strategies. Traditional asset managers, hedge funds, pension funds, and insurance companies are now using these tools for capital-efficient beta exposure, hedging, and more. This diversification fosters market resilience.

Market Volatility and Strategic Applications

Recent tariff announcements have sparked considerable market volatility. Investors have turned to credit futures for hedging and speculation. Cboe’s credit futures combine credit and interest rate risk, offering a comprehensive hedging solution. The ideal strategy depends on the macroeconomic environment.

“Exact multi-sentence quotation….”

—Speaker Name, Title

The report analyzes the expansion of these futures, highlighting their strategic applications for market participants. The report suggests credit futures are a tool for cost-effective beta exposure. The current market volatility has caused a surge in trading volume. The 10-year Treasury yield recently hit a high of 4.7% (Bloomberg, 2024).

Looking Ahead

In a complex economic landscape, credit futures have become an essential tool. They are critical for hedging risks, managing capital, and achieving better market outcomes. For more, please see the full report.