On Tuesday, Germany..........>

GERMAN AUCTION PREVIEW: On Tuesday, Germany re-opens Mar-21 Schatz for E4bln.

- BACKGROUND: The Schatz was last re-opened on March 26, at average yield of

-0.57% and Buba bid-to-cover ratio of 1.80x (real cover of 1.41x).

- RV/HISTORY: Since the last auction, the Schatz has traded a little stronger

(yield down 2.2bps) as part of a rally in the short-end and belly of the German

curve. Indeed, the day after the last Schatz auction marked the flattest the

curve had been since August 2016, with 2s10s at 50.2bps on March 27. But that

marked a recent low and this spread has since retraced, last at 57.7bps. Still,

the overall flattening trend remains very much intact, with 2s10s having fallen

from around 115bps one year ago. Versus equivalent EUR swaps, Schatz has become

marginally cheaper in the past month, with the spread dropping 1.1bps to

38.2bps, but not much difference (and indeed little movement since the start of

the year).

- CASH FLOW: There is plenty of cash returning to EGB markets (E50bln) this week

but that is nearly entirely composed of Spanish and French coupons/redemptions.

- TIMING: Results are due shortly after the auction closes at 1030BST.