AUCTION PREVIEW: German Yield Uptick Seen Helping Bobl Auction
Source: BFW (Bloomberg First Word)
People
Antoine Bouvet (Mizuho Financial Group Inc)
Padhraic Garvey (ING Groep NV)
Rainer Guntermann (Commerzbank AG)
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UUID: 7947283
(Bloomberg) -- Germany to sell new 5-year 0% 04/2022 bonds for EU4b at 11:30am CET; equivalent to about 33k Bobl futures, EU2.1m/bp in risk terms.
Alert: HALISTER1- Analysts expect “smooth” sale helped by borrowing costs above ECB depo rate, small issuance size; valuations seen on expensive side
- Mizuho (Antoine Bouvet)
- 5y yield at 10-month high and smaller-than-usual issue size to help sale
- 10/2021-4/2022 roll traded around the +9bp level yesterday, which would make the new issue relatively expensive compared to 1/2022 and 7/2022 bunds; estimates fair value at +10.5bp
- ING (Padhraic Garvey)
- Auction to go “fairly smoothly” as Bundesbank giving priority to PSPP purchases of assets with yields above the depo rate, 5y note still benefiting from repo specialness
- Commerzbank (Rainer Guntermann)
- Risk aversion and ongoing PSPP duration shift to provide support for sale
- “With swings in risk sentiment becoming key drivers for now, we still recommend using strength to scale into tactical shorts in bunds”
Source: BFW (Bloomberg First Word)
People
Antoine Bouvet (Mizuho Financial Group Inc)
Padhraic Garvey (ING Groep NV)
Rainer Guntermann (Commerzbank AG)
To de-activate this alert, click here
UUID: 7947283