The Risk Reward of a Curve Flattening Trade

After the fete meeting this week, i think it makes a lot of sense to keep flattening the yield curve. When we still see a risk of high headline inflation prints over summer, there is still a clear risk of what you call a convex reaction function with such numbers. I wouldn't even rule out that they could consider a 75 or a 100 basi point hike at the next meeting to really get in front of it if it still escalades. In such a scenario, i think the best way to reflect the risk reword is basically via a curve flati tion. After cutting the bitipe bon trade from the book, i masically have one trade, which is to

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