Morgan Stanley: Slow pace of spending in Germany unlikely to lead to significant changes in third quarter bond issuance plan.

Morgan Stanley's interest rate strategist stated that as of the end of April, Germany's defense and infrastructure spending has been slow. "If there is no substantial improvement, we believe the German Finance Agency's space to increase debt issuance is limited on this basis." They noted that in the past 10 years, the German Finance Agency has changed its third quarter plan for about 60% of the time, but except for certain special periods, the magnitude of the changes has been quite limited. "We also do not believe that the German Finance Agency will lower its debt issuance target due to the failure to meet the standards for defense and infrastructure spending." The German Finance Agency will release its third quarter debt issuance assessment on June 25th.