Germany comes to auction.....>

GERMAN AUCTION PREVIEW: Germany comes to auction for the second time this week

on Wednesday, re-opening Apr-24 Bobl for up to E3bln.

- BACKGROUND: At the last sale of Apr-24 Bobl on May 8, Germany allotted E2.4bln

at average yield of -0.46%, Buba cover of 1.6x, and real bid-to-cover 1.29x.

- RV/HISTORY: The yield on the 5-Yr benchmark has fallen by over 12bps over the

past month as the German curve has rallied. At -0.546% yield as of May 28 (per

Tradeweb data), yields are the lowest since March 2017 and if they continue

dropping at this pace then the -0.635% record low from June 2016 will soon be

within reach. The rally in equivalent EUR swaps has not quite kept pace, with

the spread widening by 3bps to 47.5bps. This has come alongside significant

flattening in the German curve since the last Bobl auction, including 2Y5Y

spread down 5bps to narrowest levels (10.3bps) since Sep 2016 and also 1Y5Y

briefly inverting for the first time since that month.

- POSITIONING: Bobl futures positioning was long coming into this week,

according to MNI's Pi methodology.

- TIMING: Auction results are due out around 1030 UK time.