HALISTER1: AUCTION PREVIEW: Tepid Reception Seen for 10-Year Bund Issuance

AUCTION PREVIEW: Tepid Reception Seen for 10-Year Bund Issuance

(Bloomberg) -- Germany to sell new 10Y bund 08/2026 for EU5b at 11:30am CET. Bond expected to outperform on the roll after the auction, though analysts expect a tepid reception at issuance.
  • Commerzbank (David Schnautz)
    • 0% coupon makes this the first-ever “10y Bubill”; see scope for some initial weakness in bunds, though firmly expect a sub-0% pricing
    • Previous two launches of 10Y nominal benchmarks were technically uncovered; “tail” of the first auction of 02/2026 was 4c, matching largest one since April 2012
    • Expect auction to be just uncovered, results unlikely to prevent bunds from rallying today
  • JPMorgan (strategists including Gianluca Salford)
    • First 10Y German benchmark to be issued with 0% coupon; expect bond to be issued at curve-adjusted discount of 1bp-1.5bp on the roll, equivalent to yield pick-up of about 4bps
    • New bond to outperform modestly after issuance as has been the case in the past six 10Y bund rolls
  • Mizuho (strategists including Antoine Bouvet)
    • Fair value for 02/2026-08/2026 roll of +5.5bps in yield terms; previous rolls show that the new benchmark could come at a discount from this level around +6.25bps
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
David Schnautz (Commerzbank AG)
Antoine Bouvet (Mizuho Financial Group Inc)
Gianluca Salford (JPMorgan Chase & Co)

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