Commerzbank On The German Deposit Situation

Commerzbank note that “this morning's Bundesbank data on domestic public deposits will be closely scrutinized.”

• “Following the drop of €16bn to a level of €38bn during the week before the Bundesbank announcement, they only declined by €2.1bn after the 0% surprise. Although one can still make the case that this implies some €5bn in deposit withdrawal given the pre-Covid seasonality (i.e. typical increase at this stage of the year), the modest decline suggests that there has been no major rotation so far.”
• “This fits the lack of BuBill richening since last week as well as our view that the remaining deposits are rather sticky. That being said, if the deposit decline continues next week, the story would be different as even last year during the deposit rotation there was a €21bn deposit increase in mid-August.”
• “In that case, this would suggest there is no notable rotation into BuBills this time around so far, effectively breaking the pattern highlighted on the scatter below. The jury hence remains out and implies 2-way volatility.”