The Bond Trade of the Year May Be Back, All Thanks to the Fed
- Mizuho suggests positioning for flatter yield curves after Fed
- U.S. 10-year yield slides 7bps to lowest since mid-October
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The Federal Reserve’s hint that it could halt interest-rate cuts amid lingering global economic gloom may have given bond traders just the thing to reboot this year’s best trade -- buying long-dated government debt.
Top-rated markets from the U.S. to Germany saw securities due in 10 years or more rally Thursday, outpacing short-dated ones, dragging yield curves down from the steepest levels in about three months. Mizuho International Plc suggests that investors position for an extension of the move with so-called flattener trades, which profit when longer-term yields fall faster than near-maturity ones.