GERMAN AUCTION RESULTS: 10-year Bund results

German ASWs and EUR swap spreads are little changed to start the week, with the geopolitical developments and impending EU supply having little net impact on the space.

• Last week saw Societe Generale note that the ECB outlook and prevailing downside global risks, coupled with expectations surrounding Dutch pension fund flow, “creates curve asymmetry and favours 5-30y EUR steepening in a moderate rates rally”.
• They went on to highlight that “EUR 6m5y implied vol screens cheap versus 6m30y, with the spread widening notably after Germany’s fiscal pivot in March 2025. Regression residuals are now near sample lows, highlighting stretched relative pricing and an attractive entry point”.
• Tomorrow’s German fiscal announcements are eyed. We will release our detailed thoughts on this matter in due course. 

• With oil prices fully reversing their initial surge to start the week, and equity benchmarks remaining resilient to geopolitical developments, Japanese Yen weakness is continuing to standout Monday. The break of a confluence of technical parameters has been assisting the move higher, namely the breach of the downtrend (drawn from the January highs) and the clean break of the May 29 high, cancelling the recent bearish theme.
• Positioning dynamics are also likely bolstering the relief rally, as price action continues to point to a market that is positioned long JPY. Indeed, in the latest CFTC report, data shows asset managers maintained their already extensive JPY longs, while leveraged funds have pared back their own longs that had just begun to be rebuild.
• Today’s advance in USDJPY (+1.16%) strengthens a bullish theme, increasing the focus on a key resistance at 148.65, the May 12 high and a reversal trigger. Clearance of this level would confirm a resumption of the bull cycle that started Apr 22. Above here, 149.28 and 150.49 represent the next targets for the move, the April 3/2 highs respectively.
• Significant events on the calendar this week include US GDP (3rd read) and May PCE, June Tokyo CPI and Fed Speak which includes Chair Powell delivering congressional testimonies.

Source: Bloomberg Finance L.P. / MNI

"The Kingdom of Denmark (DENK), rated Aaa/AAA/AAA (all stable), has mandated Danske Bank, HSBC, J.P. Morgan and Morgan Stanley as Joint Lead Managers for a new 2-year USD 144A/REGS benchmark senior unsecured transaction. The issue is expected to be launched in the near future subject to market conditions".

From market source.