The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur re-opens the 30-year 1.25%

Oct-48 Bund on Wednesday, for up to E1.0bln.

- BACKGROUND: This will be the fourth re-open in 2018 of the Aug-48, with the

past two going technically uncovered. The last one in May had real cover of

0.71x and Buba cover of 1.05x, at average yield of 1.26%.

- RV/HISTORY: The Aug-48 yield has already fallen 16bps over the past month and

24bps since the beginning of the year to 1.021%, which is also 39bps from the

2018 high. Indeed, the 30-year has had the biggest rally on the German curve

over both time spans. This is in contrast to the short end of the curve, which

is static compared to both a month ago and the beginning of 2018 (the 2-Yr yield

has been roughly around -0.63% at both points despite significant volatility in

the interim). Additionally, the low-volatility, low-volume summer trading

environment has boosted EGB peripheries versus lower-yielding Bunds. That said,

large redemptions and coupons this week (E20.5bln) could support, and this will

be the smallest 30-year sale so far in 2018 (the last three were up to E1.5bln).

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