The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur sells the 2-year benchmark 0%

Mar-20 Schatz on Tuesday for up to E4bln in size. 

- BACKGROUND: There was large German redemption and coupon payments last week

and these could help support today's Schatz auction. ECB expectations continue

to shift slightly as talk of mid-19 rate hikes grow. 

- RV/HISTORY: 2Y Schatz auctions are often technically uncovered, in fact the

last two of three have been. Valuations look a little more enticing though

today. The roll from the Schatz Dec-19 is at 3.5bp up from 2.6bp seen on Mar 23

and the 2Y German yield is the close to 1-month highs as fear of a slow down in

the German economy fades slightly. The asset swap spread for the Mar-20 was

-43bp when it was launched a 2-months ago and is ASW-40.8bp today. At the

auction a month ago, the Buba calculated cover was 1.41x, the yield was -0.59%

(4.2bp above the current yield).

- TIMING: Auction results are due shortly after bidding closes at 0930GMT