The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur re-opens the 1.25% Aug-48

Buxl Wednesday for E1.0bln.

- BACKGROUND: This will be the fifth re-open of the 30-Yr Aug-48 in 2018. Two of

the last three sales (March and May) went technically uncovered (real cover of

0.85x and 0.71x at those auctions, respectively). However the last sale on July

18 saw 1.4x real cover, the highest since November 11 and Buba cover of 1.7x,

selling at average yield of 1.02%.

- RV/HISTORY: Core EGBs have weakened since the beginning of September and the

German long end has been under extra pressure this week amid a move away from

global quality bonds, as well as anticipation of this auction. The Aug-48 is

trading at a 1-month high yield of 1.10%, having risen from an August low of

0.951%. The curve has bear steepened over the past month, with the 25-30-Yr

segment performing worst, up just over 12bps compared with 10bps for 2-Yr and

5-Yr. But the curve remains flat on a historic basis, with 10s30s at 67.1bps, up

just 3bps from the July low and down from the 2018 high of 78.1bps in June.

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