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.

RELATED TERMS
  1. Five Against Note Spread - FAN

    A spread in the futures markets created by taking offsetting ...
  2. Note Against Bond Spread - NOB

    A spread within futures contracts created by offsetting positions ...
  3. Long Bond

    The 30-year U.S. Treasury Bond. The long bond is so called because ...
  4. Credit Spread

    1. The spread between Treasury securities and non-Treasury securities ...
  5. 30-Year Treasury

    A U.S. Treasury debt obligation that has a maturity of 30 years. ...
  6. Treasury Yield

    The return on investment, expressed as a percentage, on the debt ...
Related Articles
  1. Markets

    Understanding Yield Spread

    Yield spread is the difference in yields between debt instruments.
  2. Managing Wealth

    Find The Right Bond At The Right Time

    Find out which bonds you should be investing in and when you should be buying them.
  3. Managing Wealth

    How Bond Market Pricing Works

    Learn the basic rules that govern how bond prices are determined.
  4. Markets

    Understanding Treasury Yield

    Treasury yield refers to the return on an investment in a U.S. government debt obligation, such as a bill, note or bond.
  5. ETFs & Mutual Funds

    Top 4 Treasurys ETFs (SHY, IEI)

    Learn about the specifics of the top four U.S. Treasury ETFs and how investors can buy ETFs that invest in bonds along the yield curve.
  6. ETFs & Mutual Funds

    IEI: iShares 3-7 Year Treasury Bond ETF

    Take a closer look at the iShares 3-7 Year Treasury Bond ETF, which is a BlackRock issue focused on intermediate maturity government bonds.
  7. Retirement

    How to Pick the Right Bonds For Your IRA

    Learn about the best types of bonds to include in an IRA depending on an investor's risk tolerance. Understand the tax benefits of holding bonds in an IRA.
  8. Markets

    Buy Treasuries Directly From The Fed

    If you want government securities, go straight to the source. We'll show you how.
  9. Personal Finance

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  10. Markets

    How Bond Market Pricing Works

    Yield is the commonest measure used to determine a bond’s expected return. Yield-to-maturity and spot rates are the two primary yield measures.
RELATED FAQS
  1. Will speculators buy or sell Treasury bond futures contracts if they expect interest ...

  2. Why are treasury bond yields important to investors of other securities?

    Learn about the wide-ranging impact of U.S. Treasury Bond yields on all other interest-bearing instruments in the economy ... Read Answer >>
  3. What are the maturity terms for Treasury bonds?

    Learn how treasury bonds pay interest, when they reach maturity and the differences between terms for treasury bonds and ... Read Answer >>
  4. What is the difference between the Daily Treasury Long-Term Rates and the Daily Treasury ...

    Find out more about the daily Treasury long-term rates, daily Treasury yield curve rates and the difference between these ... Read Answer >>
  5. Which of the following statements least accurately describes the characteristics ...

    The correct answer is: d) The fact that any number of bonds may be delivered to fulfill a futures contract is an advantage ... Read Answer >>
  6. What forms of debt security are available for the average investor?

    Discover the various different types of debt securities, issued by government entities or corporations, that are available ... Read Answer >>
Hot Definitions
  1. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center