BUNDS: /SWAPS: ASWs A Little Wider, Buxl Leads

No reaction in core global FI as crude oil benchmarks fall by ~$1 over a 30-minute window.

• Our commodities team doesn’t see any driver for the move in crude, with an uptick in the broader USD much more measured over the same timeframe, so that lacks explanatory power.
• Brent through yesterday’s low but within the multi-session range. Yesterday’s low in WTI holds. 

ERM5 98.12/98.25cs, bought for 0.5 in 55k Total, desks suggest that this is a cover.

This morning, Germany will hold its second 10-Bund auction of the year. On offer will be E4.5bln of the 2.50% Feb-35 Bund.

• The size is a step down from the E5.0bln seen at the last auction of this issue in January (when the Bund was launched); however, the size is consistent with recent Bund re-opens.
• Recent auctions in the German 10y segment have passed smoothly, with solid bid-to-covers (in a 1.83x to 2.40x range since July), bid-to-offers (1.52x to 1.93x range since July) and the low prices above the secondary market mid-prices throughout 2024.
• For the last 2.50% Feb-35 Bund auction on 8 January, the bid-to-cover stood at 2.12x, while the bid-to-offer came in at 1.60x.
• Bund positioning currently appears flat, and seems to have been characterized by a reduction of longs during the last week. See our Europe Positioning Indicator here: https://media.marketnews.com/MNI_PI_28012025_133af9ff97.pdf
• The political situation in Germany is characterized by some uncertainty at the moment amid snap elections being scheduled for February 23. However, the mainstream parties are expected to be able to form a functioning government as of now - so we don't expect an impact on today's Bund auction from that.
• The next German auction will be E5bln of the 2.40% Apr-30 Bobl (ISIN: DE000BU25042) on February 11, while the 2.50% Feb-35 Bund will be reopened next on February 19. Note that we also pencil in the possibility of a 30-year Bund auction next week.
• Timing: Results will be available shortly after the bidding window closes at 10:30GMT / 11:30CET.