AUCTION PREVIEW: German 2Y Cheap vs Peers, Mixed Outright Views
(Bloomberg) -- Germany to sell 0% 03/2019 for EU4b at 11:30am CET.
- Analysts note the bond offers value vs peers, though views are mixed given recent cheapening as French election concerns have reduced
- Commerzbank (Rainer Guntermann)
- Bond is marginally cheap vs its predecessor and surrounding OBLs, though still looks rich against the future
- Implied repo is below -1% while actual repo rates have continued to ease recently
- With reduced flight to quality support, today’s auction may still weigh further; flattening looks set to extend into quarter-end
- Mizuho (Antoine Bouvet)
- Optimistic on the sale, given recent 2Y Germany outright selloff and cheapening swap-spreads terms, which brings the sector back to an attractive entry point for tactical longs, especially going into the French election
- ING (Martin van Vliet)
- Bond trades at a 1bp pickup vs OBL 04/2019, 15bps special on repo, which together with the bond’s ongoing PSPP eligibility should ensure a successful auction
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Rainer Guntermann (Commerzbank AG)
Antoine Bouvet (Mizuho Financial Group Inc)
Martin Van Vliet (ING Groep NV)
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