Germany: Bond issuance reduced for the second time in a year – BBH

FXStreet (Delhi) – Research Team at BBH, note that for the second time this year, Germany is reducing its bond issuance as the government announced an 11 bln euro reduction for the entire year, of which Q4 issuance will be 6 bln less than previously anticipated.

Key Quotes

“While this may play on supply concerns as the ECB continues to buy bunds under its QE operations, most of the supply cuts involve the bills sector, which is not including in the asset purchase scheme.”

“Germany is reducing the 2-year supply by 1 bln euros, but at -26 bp, the yield on the two-year disqualifies it from QE as well. At the same time, the German government is considering boosting funding by 6.7 bln euros to help the nearly one million asylum seekers anticipated this year. German tax revenues are exceeding forecasts, and there are savings from debt servicing as well.”