Demand diverges in Germany's 12-month Treasury auction, with varying bid-to-cover ratios

(1) Two sets of 12-month Treasury bill reissuance results released by the German central bank on Monday show a distinct divergence in market subscription demand. (2) One batch had an issuance size of approximately €2.66 billion, with an average winning yield of 2.562%, down from the previous 2.622%. However, the bid-to-cover ratio plunged from the prior 2.9 to 1.4, indicating a significant cooling in demand for this batch. (3) The other batch had an issuance size of about €1.84 billion, with an average winning yield of 2.386%, lower than the previous 2.406%. The bid-to-cover ratio climbed from 2.4 to 2.9, showing a resurgence in subscription enthusiasm. (4) Both batches saw yields decline compared to previous auctions, reflecting some buying support for short-term German government bonds amid rate expectations. Nevertheless, the divergence in bid-to-cover ratios suggests differences in market preferences for allocation across maturities or batches.