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GRAPH OF THE MONTH

Higher volatility = Steeper curves

Over the past decades, periods of low bond rate volatility coincided with a smaller rate differential and thus a flatter curve in developed markets. As central banks gradually exit their non-conventional easing policies, the number of high volatility episodes should increase and we prepared for steepening curve conditions. Are there still opportunities though? One must tread carefully, but armed with the right analysis tools, we have identified some areas of interest for the short, medium and long term.

Higher volatility = Steeper curves

Source: Bloomberg, DPAM, 13.04.2018

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