Bear Curve Flattening In Europe - Two More European Bond Auctions Come At Higher Yields, Lower Bids To Cover
Two more European auctions have closed at terms that show continued deterioration in sovereign demand conditions. Earlier, Italy auctioned off €7.5 billion in one year BOT (bills) at a yield of 1.399% and a 1.659 bid to cover. This compares to the precious auction that closed at 1.377% and a 2.359 BTC. Elsewhere, the German government had to retain 15%, or €807 million, of a €5 billion 6 month bubill issue to "sell" as much as had been hoped for. The issue came at a 1.9 bid to cover, excluding the government retention, compared to 2.2 previously, and had to double the yield on the issue from 0.1923% to 0.4226%. Of the €2.153 billion in non-competitive bids were obviously accepted 100%, it is the non-competitive ones that were problematic. It was the 5.765 of competitives that were an issue: just 2 billion of the competitive bids were found to be "acceptable" to the government, meaning €2.8 billion offered rates far too high to be accepted. Is the German curve starting to bear flatten as well?
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