Fat Belly Yield Curve

[kmiklas]

Look at the big belly on this yield curve.

Mmmm mm mmmm…. My kind of market.

 

[maxinger]

 

[zhouto10]

Is it somehow because not many trades are lasting for 20 or 30 years...

 

[newwurldmn]

weren’t you the guy who didn’t understand bond math?

Look at the big belly on this yield curve.

Mmmm mm mmmm…. My kind of market.

View attachment 311560

 

[SunTrader]

Is it somehow because not many trades are lasting for 20 or 30 years...

20 or 30 years is an investment, not trade. And is done mostly for protection of principal - by some sovereign and almost all pension funds.

 

[kmiklas]

weren’t you the guy who didn’t understand bond math?

I learned

 

[trade4succes]

Interesting. Now, how to profit from this?

 

[kmiklas]

Interesting. Now, how to profit from this?

One thought is to buy a existentially risk-free 6mo bond at 5% and collect a sweet 2.5% in October.

 

[trade4succes]

One thought is to buy a existentially risk-free 6mo bond at 5% and collect a sweet 2.5% in October.

Would it be the same if I just get into a long eurodollar future expiring 6 months from now? Seems easier and more liquid.

 

[newwurldmn]

Would it be the same if I just get into a long eurodollar future expiring 6 months from now? Seems easier and more liquid.

No. But @kmiklas can explain.