Intriguing RV graphs: 5-year JGB short trade looks appealing amid stock market plunge
Key points
JGB yield curve shifted lower around the 5yr sector post-US midterms; front-end bull flattening and long-end bull steepening the new risk-off normal?
2s5s10s butterfly spread approaching lower end of recent range; 5yr body butterfly short with positive carry looks appealing
The spread was lower in some earlier periods, apparently due to temporary factors such as the BoJ's comprehensive monetary easing.