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Today, Italy sells............>

ITALY AUCTION PREVIEW
ITALY AUCTION PREVIEW: Today, Italy sells E2.0-2.5bln of the 5Y BTP 0.9% Aug-22,
E1.5-2.0bln of BTP 2.05% Aug-27, E1.0-1.5bln of CCTeu Oct-24. 
- BACKGROUND: There is an index extension set for tomorrow, that might be more
beneficial for the 10Y BTP. 
- RV/HISTORY: The Italian 10Y BTP spread to Germany has traded in a narrow range
around 165bp since mid-June and is 167.6bp today. The Aug-27 does not look
particularly cheap to the BTP future. What looks interesting is vs Spain with a
Catalan referendum this weekend and the BTP spread to Bonos having widened from
40bp in mid-Sep to 51bp today and this could be a good way to get involved in
today's 10Y. The 5Y BTP offers little along the curve, not looking particularly
cheap vs shorter Italian bonds. 5Y Italy is also trading close to tightest
levels vs Germany.  
- The 6 auction average bid-cover for CCT auctions is 1.52x. For the 5Y and 10Y
BTP, equivalent numbers are coincidentally both 1.46x, with most recent yields
of 0.84% and 2.09% respectively. 
- TIMING: Auction cut-off is 0900GMT/1000BST, results are around 0920GMT.

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