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

GERMAN AUCTION PREVIEW
GERMAN AUCTION PREVIEW: On Wednesday, Germany sells E3bln of the 10Y bmk, 0.5%
Aug-27 
- BACKGROUND: ECB meeting is Thursday but there are large French redemptions and
coupon payments today. 
- RV/HISTORY: A month ago, the 10Y Bund yield was hovering around 0.44% compared
to 0.47% at present. But, the sell-off in the past week has been impressive and
the swap spread is also making the Bund appear cheap. Indeed, inasmuch as a bond
yield that is 0.47% can be described as cheap, this one, at least considering
the compression in German-EGB 10Y spreads. The German 2-10Y spread is 118bp and
the widest since August. The spread to the RXZ7 CTD, the Aug-26 is also at
all-time highs, which helps a lot. There has tended to be around 20-30% more
than is available for sale at the 10Y, with E3.8bln bid on Oct 4. It is rare for
a technically uncovered 10Y. The Buba calculated cover ratio was 1.6x. 
- RESULTS: Auction results are due shortly after bidding close at 0930GMT.

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