EGBS: Limited Swings In Bund Futures Around Supply and DE Issuance Plan

Bund futures are -1 tick at 128.90, comfortably within yesterday’s range. The passing of Spanish and French supply has helped futures away from the 128.72 low, alongside suggestions from the German Finance Ministry that they are not considering a 50-year Bund at present. Initial support in Bunds remains unchanged at 128.51. 

• The German Q4 issuance plan saw bond issuance rise by E10.5bln, below our E12-13bln expectations. The main point to note that DFA plans only one E3bln auction for the 7-year line, rather than the two we had expected. While 30-year auction sizes were increased, it wasn’t too large in the grand scheme of things.
• The German curve leans bear steeper (yields flat to +2bps), but this doesn’t appear to be related to the German issuance plan. Long-end German ASWs aren’t underperforming the rest of the curve.
• 10-year EGB spreads to Bunds are biased tighter, with European equities staging a solid 1.3% recovery after Tuesday’s selloff.
• ECB Vice President de Guindos hasn’t given much away at today’s MNI Connect event. He said that the risk of persistent inflation undershooting is not that big.
• Today’s data (July current account and construction output) haven’t been market moving.