Although the trade has suffered bouts of volatility this year, market participants remain committed to the position, citing supportive structural and macroeconomic factors. Those expectations flattened the yield curve, reversing much of the steepening that had developed through 2025. Although the curve has recently begun to steepen again, the spread remains close to 10 basis points, well below last year’s highs. The European Central Bank left interest rates unchanged at its latest meeting but has signalled that further tightening remains possible. Despite the uncertainty, positive carry and the prospect of structural changes to European fixed income markets continue to make the strategy attractive for hedge funds seeking medium-term opportunities in rates markets.