It all boils down to the Netherlands passing a law called the "Future Pensions Act" more than a year ago. According to this law, Dutch pension funds will gradually abandon defined benefits (DB) and move towards defined contribution (DC) pensions. The largest funds, including BpfBOUW, covering almost 1 million workers, agreed to do so starting 1 January 2026. If you live and work in the Netherlands, you most likely already know.
Defined benefit pension funds typically have floating-rate assets and fixed-rate liabilities (aka defined benefits). The duration mismatch between them is usually bridged by buying lots of (fixed-rate) receiver swaps.
Removing these fixed-rate liabilities will shift demand from institutional buy-side clients from receiver towards fixed-rate payer swaps, especially in the long end of the curve.
What happens to the 30Y swap points when demand for these receivers by pension funds is gone?
Many players have already started betting that 30Y swap rates will go up and have begun positioning themselves by entering into 10s30s curve steepeners.
Bidding up the fixed rate in the 30Y region is currently being anticipated by sell-side and hedge funds, who are trying to get ahead of the January 2026.
☝Last but not least, if you are aiming to capitalize on this idea, think of the most important thing: "second-level thinking." As Howard Marks explains in the chapter of his book by the same name, being right when everyone else is right too often yields no financial gain. That may well be the case with this idea.
Further things to consider:
1️⃣ Current shape of EUR swap curve + peers
2️⃣ Historical evolution of 10y30s basis, compared to USD and GBP
3️⃣ Current and historical basis between swap market and treasuries
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