Long bond futures are useful in what scenario regarding a bond portfolio?

Long bond futures are particularly useful in a scenario where interest rates decrease. When investors anticipate a decline in interest rates, they can use long bond futures to hedge their bond portfolio or to speculate on the price appreciation of bonds. As interest rates fall, bond prices tend to rise, which benefits the holder of long futures contracts.

By entering into long bond futures, investors lock in current prices, allowing them to benefit from the expected increase in the value of bonds as yields drop. This strategy can help increase overall returns and manage interest rate risk effectively during periods of decreasing rates. In contrast, scenarios such as rising interest rates or downgrades in bond quality would typically lead to price declines in bonds and would not be advantageous for holding long futures contracts.