One of the more important....>

GERMAN AUCTION PREVIEW: One of the more important auctions next week will be

Germany's new 30Y Bund next Wednesday, the Bund Aug-48 (a E2bln auction). It

comes 4 days before the German election on the 24th but we do not hear of anyone

seeing this as an impediment to a decent auction. Of more pressing concern will

be the result of the FOMC meeting later that day. 

- This is the first new 30Y Bund for three and a half years. 

- The Finanzagentur has been oscillating between issuance of the 2044 and 2046

but these issues are now big enough and so going forward 30Y issuance will only

be on the new 2048. Forthcoming 30Y Bund auctions are on Oct 18 & Nov 22. 

- Clearly, the security will remain small for some time but definitely eligible

for PSPP. That said, its small size might dissuade the Buba from official

purchases.

- Over the past few days, the existing bmk, the 2.5% Aug-46 has cheapened

significantly to the 2.5% Jul-44 and the spread between the two Bunds is the

highest since January. Space for the new security appears to be developing.