on-line sample test one: Short duration bullet for a short term rates decrease, long term rates increase. ok, this is clear. what if: short term rates increase, long term rates decrease? Should be long duration barbell? so that reinvest at higher rate, and have the captial gain for longer? Thanks for your ideas!
Or you could be in a LT Bullet
yes LT bullet …long duration barbell would have maturities @ both ends …if all you want to do is take advantage of the LT rates decrease then you would get a LT bullet .
Thanks! Then can we say that what matters is duration either short or long, bullet is always better than barbell when dealing with yield curve changes?
No type is “always” better, else no one would use another strategy. For instance, if short rates went down and long rates went up, your barbell would do better than your LT bullet.