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BUNDS: /SWAPS: Long End ASW Outperformance On Lack Of Syndication

BUNDS
BundesbankCentral Bank NewsCEEMEAEurozoneGermanyBulletMarketsFixed Income Bullets

Some outperformance for the long end of the German ASW curve during today’s bond rally.

  • This goes against the recent theme of underperformance for long end ASWs, which has been driven by the market’s continued adjustment to increased free float and supply/fiscal risks.
  • Today’s long end ASW outperformance likely stems from the lack of a 30-year syndication announcement from the DFA, with Monday’s market volatility acting as a prohibitive factor for an announcement earlier in the week.
  • We had pencilled the syndication in for this week, with broader market expectations matching our own, seemingly building some concession into longer-dated ASWs in anticipation of the syndication.
  • 30-Year Buxl vs. 3-month Euribor registered a fresh cycle closing low yesterday, before rallying by ~1bp today.
  • We still don’t completely rule out a mandate being issued this afternoon, but an announcement and syndication next week is a much more likely outcome given the recent norm of morning mandate announcements/not issuing on a Friday.
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Some outperformance for the long end of the German ASW curve during today’s bond rally.

  • This goes against the recent theme of underperformance for long end ASWs, which has been driven by the market’s continued adjustment to increased free float and supply/fiscal risks.
  • Today’s long end ASW outperformance likely stems from the lack of a 30-year syndication announcement from the DFA, with Monday’s market volatility acting as a prohibitive factor for an announcement earlier in the week.
  • We had pencilled the syndication in for this week, with broader market expectations matching our own, seemingly building some concession into longer-dated ASWs in anticipation of the syndication.
  • 30-Year Buxl vs. 3-month Euribor registered a fresh cycle closing low yesterday, before rallying by ~1bp today.
  • We still don’t completely rule out a mandate being issued this afternoon, but an announcement and syndication next week is a much more likely outcome given the recent norm of morning mandate announcements/not issuing on a Friday.