2-yr to 10-yr Gilts faded some of......>

GILT SUMMARY: 2-yr to 10-yr Gilts faded some of their earlier move lower in

London afternoon trade, supported by recovery in German Bunds in wake of an

overall dovish tone from ECB press conference. The ultra long-end though either

remained in lower range or extended losses and in turn steepened the curve

further.

- 2-yr Gilt yield is unch at 0.76%, 5-yr +0.8bp at 1.029%, 10-yr +1.1bp at

1.278%, 30-yr +2.1bp at 1.725% and 50-yr +2.7bp at 1.566% according to Tradeweb.

- The 2-yr to 10-yr part of the yield curve pared losses as Draghi said that the

English version of ECB statement is the one markets should follow, although the

President did sound a little more confident on inflation hitting its target.

- Short sterling futures are trading lower, strip steeper as blue contracts are

2 ticks lower. Earlier, markets reported decent buying in the front end of the

strip with Mar9, Jun9 and Sep9 contracts being bought in circa 40k.

- Breakevens are  circa 1bp wider, while 2-/5-/7-yr swap spreads are ~1bp wider.

- Little data from the UK over next few days, however this picks up rapidly from

Aug 1 with PMI data and then BoE super Thursday on Aug 2.