AUCTION PREVIEW: Rich Valuation May Weigh on Germany 30y Sale
Source: BFW (Bloomberg First Word)
People
Vincent Chaigneau (Societe Generale SA)
Antoine Bouvet (Mizuho Financial Group Inc)
Bernhard Gruenaeugl (Commerzbank AG)
Gianluca Salford (JPMorgan Chase & Co)
Michael Leister (Commerzbank AG)
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UUID: 7947283
(Bloomberg) -- Germany to sell 2.5% 2046 bund for EU1b at 11:30am CET in first auction of long-dated notes this year; SocGen, JPMorgan see valuations as expensive.
Alert: HALISTER1- SocGen (Vincent Chaigneau)
- Sees limited interest on 2046 bund at sale, which is “rich” relative to curve and comparables such as DSLs as longer-dated bunds have been more resilient to bearish pressure than shorter maturities in past week
- JPMorgan (Gianluca Salford)
- 2046 bund “slightly dear” at current valuation with spread over July 2044 note narrowing to 2bps from 5bps
- JPMorgan has 10s30s steepener recommendation on German bunds
- Commerzbank (Michael Leister, Bernhard Gruenaeugl)
- Substantial short base of 2046 note and current tight swap spreads should ensure demand at sale
- Reiterate view that 10y sector offers better value on the curve via a 2s10s30s fly, even with 10s-30s trading at the steepest level in at least two years
- Mizuho (Peter Chatwell, Antoine Bouvet)
- 10s30s steepness is reflection of “more cautious tone from investors toward duration risk heading into a rise in headline inflation and the (misplaced) fear of an earlier tapering of PSPP”
Source: BFW (Bloomberg First Word)
People
Vincent Chaigneau (Societe Generale SA)
Antoine Bouvet (Mizuho Financial Group Inc)
Bernhard Gruenaeugl (Commerzbank AG)
Gianluca Salford (JPMorgan Chase & Co)
Michael Leister (Commerzbank AG)
To de-activate this alert, click here
UUID: 7947283