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The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW
GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur taps off-the-run 30-yr 2.50%
Jul-44 Bund for E1.5bln in size Wednesday.
- BACKGROUND: Yesterday's auction of the 0.0% Jun-20 Schatz was technically
uncovered as was the case for half of the previous eight auctions. However,
speculation that the EU may issue a joint statement showing support for Angela
Merkel may help alleviate domestic political risks and ease pressure on Bunds. 
- RV/HISTORY: The Jul-44 rallied sharply during the second half of May, before
reversing in the early part of June. The yield currently trades at 1.056% and is
46bps inside the comparable EUR swap. The Jul-42/Jul-44 yield spread has
squeezed higher to 7bps and close to ytd widest levels which could offer some
attraction. German sovereign curve has steepened over the course of May and June
with the 5s30s spread widening to 138bps from a 2018 low of 122bps on Jan 31.
The Jul-44 Bund las last tapped back in February of this year and therefore
results are not comparable.
- TIMING: Results are due soon after the auction closes at 0930GMT

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