Key Points
- The U.S. bond market follows a similar schedule to the U.S. stock market with some exceptions.
- Interest rates are one of the most important factors to consider when investing in bonds.
- You can trade bonds on the futures market.
A bond market holiday is a day when the bond markets are closed for trading. These days usually coincide with the holiday schedule of the country’s exchange. For example, the U.S. stock market holidays are different from the U.K. stock market holidays. In the same way, the U.S. bond market holiday calendar is always different from the Canadian bond market holidays.
This article will give you information on when bond market holidays occur, when the bond markets are open and how to invest and/or trade in anticipation of a bond market holiday.
What is a Bond Market Holiday?
You may already know that you can’t trade stocks and bonds on weekends. However, there are other days when the major exchanges close. Like stock market holidays, the bond market observes a holiday schedule.
The U.S. bond market holidays are as follows:
- New Year's Day
- Martin Luther King, Jr. Day
- President’s Day (Washington's Birthday)
- Good Friday
- Memorial Day
- Juneteenth National Independence Day
- Independence Day
- Labor Day
- Columbus Day/Indigenous Peoples’ Day
- Veterans Day
- Thanksgiving Day
- Christmas Day
Bond market holidays are the same as the U.S. stock market holidays with the addition of Columbus Day/Indigenous Peoples’ Day and Veteran’s Day. If Independence Day (July 4) or Christmas Day (December 25) fall on a weekend, the market will take the following Monday off to observe the holiday.
However, it’s different with New Year’s Day. In the event that New Year’s Day falls on a weekend, the market does not observe a holiday for it during that trading year.
The Securities Industry and Financial Markets Association (SIFMA) proposes the bond market holiday schedule. SIFMA is a non-profit trade association that formed when the Securities Industry Association merged with the Bond Market Association in 2006. The organization represents a range of investment firms, including securities brokerage firms and investment banks.
SIFMA makes recommendations for bond market holidays in the United States, the United Kingdom and Japan. Although the markets don’t have to accept the recommendations, the U.S. bond market holidays are 100% in line with the SIFMA bond market holidays.
What Time Does the Bond Market Open and Close?
The bond market operates during the same time as the U.S. stock market. This means normal trading hours start at 9:30 a.m. Eastern Standard Time (6:30 a.m. Pacific Standard Time) and ends at 4 p.m. EST (1 p.m. PST).
The bond market hours are similar to the stock market in that it also allows premarket and after-hours trading times. The premarket trading hours of the bond market occur from Monday through Friday and open at 8 a.m. EST and close at 9:30 a.m. EST. A limited number of brokers offer premarket trading beginning at 4 a.m. However, for some investors, there is little benefit to trading that early. The after-hours trading times are 4 p.m. to 8 p.m. EST from Monday through Friday. Electronic communication networks facilitate the execution of trades on weeknights.
Some brokers limit the availability of premarket and after-hours trading. Check with your broker to learn about any limitations. If there are limitations, the trade will execute on the following trading day.
What is a Bond Market Early Closure?
On specified days, the bond markets will close at 2 p.m. for what is known as a “partial holiday.” On these days, the bond markets open at their normal time. SIFMA recommends these days for early closure in the United States (note that the actual date will be different depending on the year):
- The day before Good Friday
- The Friday before Memorial Day
- The day before Independence Day
- The day following Thanksgiving
- Christmas Eve (when it falls on a normal trading day)
- New Year’s Eve (when it falls on a normal trading day)
How to Invest Over a Bond Market Holiday
You can’t execute trades on a bond market holiday, but you can take steps on the days leading up to the holiday to ensure that you are positioned for whatever happens after. For reasons that aren’t entirely clear, the market does have some historical patterns around certain holidays.
For example, the period between Christmas Day and New Year’s Day has historically been one of the times when investors see the most gains in the market. The same is true of Good Friday. However, the day before and after President’s Day are typically weak days for the market.
If you’re a buy-and-hold investor, a bond market holiday should not affect your strategy. You’re not trading on the news, so even if a significant market-moving event occurs, your strategy of “time in the market” vs. “timing the market” will stay in effect.
However, you should pay attention to when your options expiration date falls. Monthly contracts typically expire on the third Friday of the month. However, if there is a holiday on that Friday, the option expires the day before. Check before the holiday to ensure you aren’t holding a bond you didn’t want to purchase once the markets open for trading.
How to Trade Over a Bond Market Holiday
For the purposes of this article, we’re defining a trader as an individual who plans to own a security for a short period of time (several months or just several days).
The same holiday effects apply if you’re a trader as opposed to an investor. Check your option expiration dates. Otherwise, you don’t need to do much since you can’t trade bonds during a bond market holiday.
Can You Still Use Your Account While the Stock Market is Closed?
You cannot actively trade on a bond market holiday. That doesn’t mean you can’t place an order. However, your broker won’t fill your order until the market reopens. Since bond prices move up and down like stock prices, you may not get the price you want.
Plan Accordingly During Bond Market Holidays
Allow yourself some time away from the markets. In the United States, bond market holidays are the same as the major U.S. holidays. Feel free to relax and enjoy time with your friends and family.
Just because you can’t invest on certain holidays doesn’t mean you can’t invest on the days immediately before and after bond market holidays. If you’re a buy-and-hold investor, you should continue to do what you do. If you’re an active trader, you can profit during these days if you understand some of the conditions that present themselves during the holidays. These conditions include less liquidity and lower trading volumes.
