AUCTION PREVIEW: 30Y Bund Supported by RV, Bund Scarcity
(Bloomberg) -- Germany to Sell EU1b 2.5% 08/2046 at 11:30am CET; analysts are optimistic on the sale given value in RV, bund scarcity concerns, supply pause in the sector.
- Citi (Harvinder Sian)
- Expect flatter German 10s30s over medium term; in RV, German 30s look cheap vs 20s, also see value vs 30Y DSLs given the recent 30yr bund underperformance vs other core/semi-core EGBs
- Mizuho (Peter Chatwell)
- 30Y bund roll (07/2044-08/2046) widened 0.9bps from tightest levels seen in early June, partially down to decision for two auctions in a row of this bond; now 0.5bp cheap to fair value
- Recent fall in oil prices, subsequent flattening of 10s30s means that 30Y Germany has less allure from a macro perspective
- Any weakness into auction should be taken in the market’s stride, given ongoing bond scarcity concerns
- Commerzbank (David Schnautz)
- Auction should keep streak of record low primary market yields intact, current yields in secondary markets of 0.46% vs 0.65% last tap in June
- Prior three 30Y bund auctions were technically covered, lack of relaxation of ECB QE depo rate restriction should outweigh concerns following last week’s poor OBL auction
- Two-month supply pause in 30y sector, three months until the last reopening not just of the Bund Aug46 but in 30y sector in general, expect a smooth, covered auction
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Harvinder Sian (Citigroup Inc)
David Schnautz (Commerzbank AG)
Peter Chatwell (Mizuho Financial Group Inc)
To de-activate this alert, click
hereUUID: 7947283