In a static yield curve, are we assuming an upward sloping curve or can we assume a downward sloping yield and still take some active yield curve strategies to benefit from the position?
Assume a normal yield curve.
Inverted yield curves don’t last.
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and why do some of the strategies involved taking more duration? I mean if the yield curve is going to be the way it is, what benefits are we getting by having more duration?
In the book, it says with buy and hold strategy or even with the riding yield curve, we can increase the duration, but I don’t even see the point of it.
For a buy and hold investor who expects to hold a bond until maturity they don’t really care about interest rate and more focused on capturing the term and illiquidity premium
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Longer duration implies longer maturity, which, with a normal yield curve, gives you higher yield.
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