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On Wednesday, Germany........>

GERMAN AUCTION PREVIEW: On Wednesday, Germany sells E3bln of the 10Y bmk, 0.5%
BACKGROUND: There is E13bln of Schatz redeeming on Thursday. Such redemptions
are likely heavily-owned by the ECB/Buba and so cannot be reinvested at the
auction but only in secondary trading. However, this is still a small benefit. 
- RV: A good concession was built in on Tuesday but statistically there has been
no strong evidence of daily mean-reversion for the 10Y Bund since early July. On
the positive side, the 5-10Y German spread has steepened in the past week and
the more important spread between the Bund future and 10Y bmk is at its steepest
since the Aug-27 was issued. This offers an easy hedge, better than using swaps
to get into the auction.
- HISTORY: Bidding at 10Y Bund auctions are modest but there is generally more
than available for sale. According to the Buba's bid-cover calculation, the six
auction average is 1.45x and the yield at the Aug 23 auction was 0.41%.
- RESULTS: Auction results are due after bidding close at 0930GMT.

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