The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur taps the 2-year 0.0% Jun-20

Schatz on Tuesday for up to E4.0bln.

- BACKGROUND: A successful auction today would take total German issuance to 56%

of target for 2013. However, the last tap of the Jun-20 went uncovered, as was

the case for half of the last eight auctions.

- RV/HISTORY: The collapse in the benchmark 2-year schtaz yield at the time of

Italy's recent political drama has since reversed. The 0.0% Jun-20 currently

trades at a yield of -0.622% from a 2018 low of -0.765% on May 29 and trades

46bps inside the comparable EUR swap. The 2s5s curve has flattened since the

last 2-year auction with the spread narrowing to 36bps from 44bps on May 23.

Thus far the market seems to have largely shrugged off the ECBs announcement

about an end to QE and there is little in the way of economic data today to

impact the auction.

- TIMING: Results are due soon after the auction closes at 0930GMT.