BofA Favour UKTi 2052s/2068s Real Flatteners

Bank of America write “a flattening then downturn in what had been an improving trend in life expectancy is what is most often mentioned in explanations about ultra long linkers' poor performance in the UK.”

• “Less often talked about is that they used to be a handy source of simple leverage and are no longer regarded as such.”
• “But it's not all bad news, by any means. The market sell-off has markedly reduced the ultralong proportion of Gilts, especially in linkers, so if there is a supply-demand overhang, it's a much smaller problem than it was.”
• “Carry has been a strong headwind for ultra long end linker flatteners for the last few years (even at the very long end), but that should be over.”
• “And the convexity benefit seems undervalued now it's no longer a high concept and can be seen with a naked eye.”
• “We favour UKTi 2052s/2068s real flatteners.”