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Swap Spreads Narrow With German Repo Squeeze Seen Easing

BONDS

German swap spreads are tightening on the announcement by the German finance agency that it will increase the availability of Bunds for repo operations.

  • Recall there has been an ongoing squeeze in repo markets which has seen ASW widen.
  • This move should ease those pressures to some degree and means swaps can richen vs German cash bonds.
  • See Schatz ASW spread below:

Source: BBG

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