AUCTION PREVIEW: 30Y Germany; Poor Auction Record, Value in ASW
Source: BFW (Bloomberg First Word)
People
Khrishnamoorthy Sooben (Barclays PLC)
Antoine Bouvet (Mizuho Financial Group Inc)
Benjamin Schroeder (Commerzbank AG)
Nishay Patel (UBS Global Asset Management Japan Ltd)
To de-activate this alert, click here
UUID: 7947283
(Bloomberg) -- Germany to sell 2.5% 07/2044 for EU1b at 11:30am CET; analysts mixed on value in RV, highlight recent technically failed auctions in the sector; potential support from upcoming redemption cash-flows.
Alert: HALISTER1- Barclays (Khrishnamoorthy Sooben)
- Bond has cheapened ~2bps vs 07/2042 over past couple of months, trades at a discount, though still rich vs 08/2046
- Despite recent flattening, 10s30s ASW box has seen 30y ASW underperform by ~7bps over past 6 weeks; leaves box at top end of recent trading range, reflects recent heavy long-end supply
- Cross-market, 30Y Germany has underperformed France, Belgium by 10bps-12bps over past week; this came from 12-month tight lvls, still does not look cheap on this basis
- UBS (Nishay Patel)
- Last three 30Y Germany re-openings have all technically failed, avg real bid/cover 0.7x, avg yield tail of 0.6bps; large redemptions due this week may provide some support
- German 10s30s has flattened over the month, it has done so less than swaps, driving ASW back to steep end of 6- mo. range
- Cross-market, 30Y Austria, France are close to cheap end of 1Y range vs Germany
- Commerzbank (Benjamin Schroeder)
- Little outright concession, yields -30bps since last tap at end of Jan.; 30Y ASW has widened by ~5bps since end of Jan., toward upper end of trading range since late 2015
- Mizuho (Antoine Bouvet)
- In RV, spread to 08/2046 is slightly too flat, compared to what its directionality implies
- 10s30s flattener remains favored curve trade heading into March ECB; see trade benefiting from a boost in QE on scarcity effect or disappointment on a reduction of inflation risk premium
- NOTE: Germany to repay EU16b in redemptions on Feb. 26; as settlement is T+2, likely to impact reinvestment activity on Feb. 24
Source: BFW (Bloomberg First Word)
People
Khrishnamoorthy Sooben (Barclays PLC)
Antoine Bouvet (Mizuho Financial Group Inc)
Benjamin Schroeder (Commerzbank AG)
Nishay Patel (UBS Global Asset Management Japan Ltd)
To de-activate this alert, click here
UUID: 7947283