HALISTER1: AUCTION PREVIEW: Short Base in Bunds to Support Supply

AUCTION PREVIEW: Short Base in Bunds to Support Supply

(Bloomberg) -- Germany to sell 0.5% 02/2026 for EU4b at 11:30am CET. Analysts highlight the bond trades special in repo, suggesting a strong short base, which is likely to support the auction.
  • Mizuho (Antoine Bouvet)
    • Optimistic about this auction; bond currently trades special in repo, indicating a short base among dealers
    • 10Y roll looks slightly cheap, though prior rolls have tended to cheapen later in auction cycle; risk-reward therefore unattractive
  • Commerzbank (Benjamin Schroeder)
    • Bund yields have risen since ECB meeting as rate cut expectations were priced out, see limited risk of further back-up in bund yields remote
    • Unlike 2Q last year, long-end yields much better anchored via negative short-end yields; Bundesbank’s PSPP purchases for this year now set to surpass total gross bund supply
  • ING (Martin van Vliet)
    • 10Y bund traded “super special” in the repo market yesterday, reflects large short position of dealers, expect to see decent demand at the auction
    • In RV, bond trades cheap vs old, high-coupon 2027 and 2028 bunds, offer 13bps pick-up to the DBR 0.5 02/2025 since the end of Jan.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Antoine Bouvet (Mizuho Financial Group Inc)
Benjamin Schroeder (Commerzbank AG)
Martin Van Vliet (ING Groep NV)

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