German government bonds are trading little changed Wednesday into the NY session, with the belly of the curve outperforming following solid 10-year Bund auction, albeit in light volumes ahead of the key FOMC minutes later this session. Germany alloted E4.153bln of the 10-year benchmark 1.75% July 2022 Bund issue at record low average yield 1.31% vs 1.52% previous auction on June 13 and bid-to-cover ratio of 1.5 vs 1.4 previous. In addition, there was no tail and strategists noted the aggressive bids at E6.39bln. Ahead of the auction, there were concerns about a potential tail given the issue was expected to be sold at a record low yield and size of E5.0bln was E1.0bln more than provisional announcement by the DFA. Spain 10-year yield spread is 13bps tighter at +532bps as markets digest latest comments from Spain Prime Minister Mariano Rajoy in Parliament, where additional budget measures were announced for E65.0bln over 2.5 years. Elsewhere, Portugal underperformed other EMU periphery bonds, with 10-year OT yield spread widening 13bps to +902bps
EasyForexNews Research Team