Today Germany’s 30-year bond auction was undersubscribed, receiving €3.8 billion in bids for €4 billion sought. The bond has a 3.25% coupon, with an average yield of 3.33%. That’s lower than the prior average yield, which was 3.895%.
The concern is that this is the second 30-year bond auction that went undersubscribed recently, April being the last.
Germany only narrowly covered an auction of the 10-year bunds at the beginning of the month.
The main concern must be that there is just too much government debt flooding the market to be bought up, and, with an implicit guarantee in place for fringe states like Spain and Greece, their yields are more attractive.