Interest rate futures
What is a Yield Curve Trade (e.g., steepener or flattener) and how do I execute it using ZT and ZN spreads?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A yield curve trade bets on changes in the slope between short and long rates, executed by going long one maturity and short another, such as buying ZT and selling ZN to bet on curve steepening.
How it works
Steepener trades profit when long yields rise faster than short yields (or short yields fall faster); flattener trades profit from the opposite, often sized using duration-weighted ratios (DV01-neutral).
An example
Anticipating Fed rate cuts to boost the short end while long yields stay elevated, a trader buys ZT futures and sells ZN futures to position for curve steepening.
Risk & limitations
Proper DV01-weighting is essential since ZT and ZN have different durations; mismatched sizing turns a curve trade into an unintended directional rate bet.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.