Five Against Bond Spread - FAB

DEFINITION of 'Five Against Bond Spread - FAB'

A spread in the futures markets created by taking offsetting positions in futures contracts for five-year treasury bonds and long-term (15-30 year) treasury bonds.

BREAKING DOWN 'Five Against Bond Spread - FAB'

A FAB spread is created by either buying a futures contract on five-year treasury bonds and selling one long-term treasury bonds or vice versa. Investors speculating on interest rate fluctuations will enter into this type of spread in hopes of under or overpriced treasuries.

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