AUCTION PREVIEW: German 10Y Seen Offering Value Vs Longer Bonds
Source: BFW (Bloomberg First Word)
People
Martin Van Vliet (ING Groep NV)
Antoine Bouvet (Mizuho Financial Group Inc)
Gianluca Salford (JPMorgan Chase & Co)
Michael Leister (Commerzbank AG)
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UUID: 7947283
(Bloomberg) -- Germany to sell 0.5% 02/2026 for EU4b at 11:30am CET, with some analysts highlighting attractiveness vs bonds in 12Y-15Y sector.
Alert: HALISTER1- ING (Martin van Vliet)
- Absolute valuations “stretched”, 10Y benchmark looks attractive in Z-spread vs 12Y part of the German curve
- Traded 40bps special in repo yesterday, suggests auction will get done at reasonable levels
- Mizuho (Antoine Bouvet)
- 10Y yields remain close to the bottom of recent range, continue to expect more gains given weak inflation, growth dynamics, bond scarcity
- Bond is fairly priced in micro-RV; roll to 08/2025s ~7.1bps is near top of its range, which may seem attractive, but tends to cheapen into end of auction cycle, offers poor risk-reward
- JPMorgan (Gianluca Salford)
- 10Y benchmark has been cheapening vs off-the-run bund 08/2025, old-30Y 07/27; 10Y sector is ~2bps cheap 5s10s15s fly
- Commerzbank (Michael Leister)
- Auction should fail to produce spectacular metrics; bund swap spreads at the upper end of range, 10Y should catch up with richer bonds as it rolls down the curve in coming months
- Cheapness seen in swap spread is even more pronounced vs longer-dated bunds, 07/2027 to 07/2034 close to 50bps through swaps
Source: BFW (Bloomberg First Word)
People
Martin Van Vliet (ING Groep NV)
Antoine Bouvet (Mizuho Financial Group Inc)
Gianluca Salford (JPMorgan Chase & Co)
Michael Leister (Commerzbank AG)
To de-activate this alert, click here
UUID: 7947283