ECB: Unclear How Much Rehn Has Actually Changed His View

This morning, Germany will hold its fourth regular (non-green) Bobl auction of the year. On offer will be E4.5bln of the 2.40% Apr-30 Bobl.

• The size is in line with the E4.5bln seen at the last re-open of that Bobl on March 4.
• That last re-open was a rather weak auction, with the lowest bid-to-cover since June 2023 (1.69x) and the lowest bid-to-offer (1.32x) since April 2023 in the Bobl segment. At least the low price came in above the secondary markets mid-price at that auction. Note that March 4 was the day that later saw the major German fiscal announcement.
• Earlier auctions in the German Bobl segment have passed smoothly, with solid bid-to-covers (in a 1.73x to 2.75x range since January 2024), bid-to-offers (1.45x to 2.29x range since then) and the low prices above the secondary market mid-prices throughout 2024.
• Supply is in focus generally this morning, with a syndication from France and auctions from the Netherlands and the UK.
• Bobl positioning currently appears short - see our latest Europe Pi positioning indicator (published yesterday) here.
• The next German auction will be next tomorrow's E1.5bln of the 2.60% May-41 Bund (ISIN: DE000BU2F009) and E500mln of the 2.50% Aug-46 Bund (ISIN: DE0001102341), while the 2.40% Apr-30 Bobl will be reopened next on April 15.
• Timing: Results will be available shortly after the bidding window closes at 10:30GMT / 11:30CET.

Germany's IFO Business Climate Index rose in March for the 3rd consecutive month, to 86.7 (85.3 prior, revised from 85.2) for oming in exactly in line with expectations. The print suggests a more broad-based increase in sentiment than yesterday's PMI release, which saw manufacturing rebounding but services screening dovish. IFO concludes that "the German economy is hoping for improvement" - nevertheless, the overall print remains in contractionary territory.

• Expectations were the upside driver vs February, at 87.7 (vs 87.3 cons; 85.6 prior, revised from 85.4) - some uptick was expected amid expectations for higher fiscal spending following the related announcement by the likely incoming CDU/CSU/SPD coalition. The current assessment reading meanwhile saw a more modest improvement, to 85.7 (vs 85.5 cons; 85.0 prior).
• Across sectors, manufacturing saw a material uptick in expectations albeit from very low levels. New orders were slightly lower than before but the current assessment in manufacturing increased slightly overall. In services, "there was renewed hope, particularly among architecture and engineering firms", with a notably stronger expectations print in the sector. Trade also saw some uptick in both expectations and the current assessment. Lack of orders remains the biggest challenge for the construction sector.