Curve steepeners and the boomer trade
Why would the curve slope back our boomer position? The argument goes as follows: The treasury’s issuance of coupons, the manufacturing rebound and the BoJ’s decreased incentive to buy bonds will contribute to a steepening of the curve and that will in turn hurt duration-sensitive assets like Nasdaq in a move similar to that in late 2021 and early 2022. The play would be to move inwards on the risk curve in this scenario and join the boomers.
Chart 1: Steepeners in the curve wreck duration