Today, Germany sells E3bln...>

GERMAN AUCTION PREVIEW: Today, Germany sells E3bln of the 10Y bmk, 0.5% Feb-28 

- BACKGROUND: This is just the third outing for this particular security. There

are no coupon or redemption payments in the core but large month-end extensions

on Wednesday should help.

- RV/HISTORY: On the positive side, the 10Y yield is 0.66% is fairly generous

compared to the past few years and ahead of weekend elections in Italy,

peripheral debt might be shunned. However, the flattening of the yield curve in

the past 10 days makes small month-end extension type trades appear less

attractive, as is the hedge with the RXH8 futures contract. The spread to the RX

CTD is just 11.6bp, about 2.5bp lower than the peak in January and 10Y Germany

is the most expensive versus swaps since mid-January. It may be a tough auction.

- RESULTS: Auction results are due shortly after bidding close at 1030GMT.