Fat Belly Yield Curve

Look at the big belly on this yield curve.

Mmmm mm mmmm…. My kind of market.

 

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

 

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

 

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.

 

I learned

 

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.

 

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.