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GERMAN AUCTION PREVIEW:......>

GERMAN AUCTION PREVIEW
GERMAN AUCTION PREVIEW: GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur
re-opens its 10-year linker DBRi 0.1% Apr-26 issue on Tuesday for up to E1bln in
size.
- BACKGROUND: This tap takes German linker issuance YTD to E6bln -- lower end of
the DFA's IL issuance target range of E6bln-E10bln for 2017. This is the
penultimate German linker auction for 2017 with the final sale scheduled for Nov
7.
- History/RV: The German 10-year linker has been richening since July 6 and
trades at a real yield of -1.03%. The breakeven yield is at 1.22% and compares
to a core HICP of 1.1% but the outlook for HICP is widely expect to rise. Real
yield carry for the coming two months is quite positive and running at around
3bp per month. The last German 10-year linker auction on June 6 saw strong
demand but the auction size was much smaller - the DFA allotted E406mln at a
real yield of -1.0% and covered 2.3 times.
- Timing: Auction results are due shortly after bidding closes at
0930GMT/1030BST.

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