Meaning of steepener | Babel Free

Definitions

A trade whose terms are based on the assumption that the rate of return will increase.

Examples

“Steepeners are one example where cashflows are computed as difference between two swap⟳ rates, e.g. the 10 years and the 5 years. As the name⟳ of instrument suggests, this gives a view⟳ on the steepness of the swap⟳ curve.”

“Provided that the curve doesn't ever flatten too much and the option remains out-of-the-money, then we will put⟳ on flatteners when the curve steepens and put⟳ on steepeners when the curve flattens.”

CEFR level