Demand for Germany's 12-month government bond auction is mixed, with yields fluctuating.

(1) Data from the German central bank shows that approximately 2.4 billion euros of 12-month government bonds were sold via supplementary issuance on the day, with an average yield of about 2.49%, lower than the previous 2.66%. The bid-to-cover ratio was approximately 1.4 times, dropping significantly from the prior 2.8 times, indicating cooling demand at the front end. (2) Another supplementary issuance of around 2.2 billion euros of 12-month government bonds saw an average yield of about 2.65%, higher than the previous 2.50%. The bid-to-cover ratio was about 2.5 times, a substantial increase from the earlier 1.4 times, showing divergence in the performance of the two auctions. (3) The mixed movements in yields reflect market disagreements regarding the short-term interest rate outlook. Allocation willingness for short-term instruments is influenced by liquidity expectations and the European Central Bank’s policy path; subsequent attention will focus on how changes in the money market funding environment influence demand for further auctions.