I think the basis for shorting longer bonds (which no-one seems to be doing... yet, or they are and doing horribly) has to do with how concentrated the market is at the long end. Big players...pension funds, insurance coys. etc are having to buy excessive duration (flattening curves everywhere), which comes with risk.
The media has been talking a bit about duration and interest rate risk recently (something like a 1% change in rates will lead to a trillion or so wiped off global bonds), so thought it'd be interesting to compare the volatility in price (for a given change in yield) between German and Aus 10yr bonds. Both bonds mature in 2026. In order to get a feeling of the volatility in price for large movements in yields, we can find the 'convexity' of each bond (the non-linear relationship b/w yields and price) and get some volatility figures from that:
A 1% rise in yields will lead to a larger fall in price for the bund than for the Aus 10yr. For large upward changes in YTM, the bund would be smashed (like in Apr '15). I suspect another event like that one will occur at some point and right now for the bund we're at similar yields. But you never know...
(20min delay)