Despite the 15-year sector presumed to have less negative convexity versus 30-year collateral, recent research has said that it might not be an effective hedge against rising volatility. Further, analysts said that extension protection from the 15-year sector would be in less demand in the near term.

While evidence strongly shows that 15-year collateral still has better convexity compared to 30-year product and will therefore outperform if the market breaks out of its recent range, the market's response to shifts in volatility remains unclear, said a recent Merrill Lynch report.

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