BUNDS: German 2s/5s Swap related trade

ERU5 98.125^ trades 15 in 5K all day paper to paper.

RBC remain patient when it comes to recommending outright breakeven longs, despite outlining a move higher as a long-term view.

• They write “whilst 10-Year breakevens do look optically cheap (back to the immediate pre-COVID lows) the downtrend since the 2022 highs still remains firmly in place. We see a similar picture unfolding in energy markets, where prices appear to be stabilising at key long-term resistance although they remain in a downtrend”.
• However, RBC do see some value in RV plays.
• They highlight “a general bias towards rates convergence and have been recommending gilt/Bund tighteners as an expression of this view with the supply of gilts generally now set to slow into the seasonal August hiatus which should be supportive of this also. We like 10-Year UK/EUR real yield spread tighteners”.
• Finally, they note that “10-Year IOTAs also look rich to us and look set to tactically cheapen - hence being long breakevens vs. swaps also makes sense here”.

• EU2b WNG Long 3Y Fixed (Nov. 17, 2028) at MS+12 (guidance was MS+15 area). MNI had expected a transaction today with a E1-3bln size.
• Books above EU15b (excluding JLM interest): Leads
• Coupon: Annual, act/act, short first
• Settlement: June 17, 2025
• ISIN: EU000A1Z99X3
• Bookrunners: HSBC, MS (B&D), UniCredit

Details as per Bloomberg and MNI colour.