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

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 that could be useful. 

- 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. Inasmuch as a bond yield

that is 0.47% can be described as cheap, this one is considering the compression

in German-EGB 10Y spreads. The German 2-10Y spread is 118bp and the widest since

August. And, 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 bids than is

available for sale at the 10Y, with E3.8bln total bid on Oct 4 for E3bln on

offer. It is rare for a technically uncovered 10Y. The Buba calculated cover

ratio was 1.6x at the last auction. 

- RESULTS: Auction results are due shortly after bidding close at 0930GMT.