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Free AccessThe Deutsche Finanzagentur...>
GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur re-opens its 2-year benchmark
0% Dec 2019 Schatz issue Tuesday for up to E5bln in size.
- BACKGROUND: At the weekend, the German SPD decided to enter formal Grand
Coalition talks but there is still a long way to go before a government is
formed. There are no coupon or redemption flows to help bidding this week.
- RV/HISTORY: The 2Y Schatz swap spread is often seen as a repo or
collateral-driven trade but currently, the spread is responding to the lighter
touch of ECB buying and the expectation that it will get lighter still later in
the year ahead. The ASW spreads of all the Schatz trade in a very tight range of
-43bp to -45bp, with the higher maturities more expensive. The Dec-19 trades
roughly where is should in this regard. Outright, the 2Y German yield is
-0.602%, towards the high end of its six month range. A six month
Buba-calculated cover ratio is 1.6x, or 1.3x calculated more conventionally.
- TIMING: Auction results are due shortly after bidding closes at 1030GMT
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.