After a soft opening, Gilts have.......>

GILT SUMMARY: After a soft opening, Gilts have only traded higher in wake of

disappointing UK, Eurozone and US data and look set to close near session highs

as markets re-think central bank policy in the near-term. The 5-yr to 10-yr part

of the yield curve has outperformed the rest of the curve.

- 2-yr gilt yield is -6.5bp at 0.756%, 5-yr -7.4bp at 1.081%, 10-yr -7.2bp at

1.385%, 30-yr -6.2bp at 1.809% and 50-yr -6.6bp at 1.61% according to Tradeweb.

- Gilts faded soft opening move following UK service PMI which rose to 52.8 in

April from a weather induced 52.4 in March, but was below consensus for a rise

to 53.5 and then spiked higher in wake of 0.3% drop in Eurozone core inflation.

- The near 3bp rally in the 5-yr did not help the auction which came with a tail

of 0.5bps vs 0.1bp previously and temporarily halted rise in Gilts

- Gilts soon extended their rally in the afternoon however, boosted by soft US

ISM and durable goods data.

- Short Sterling strip is between 3 and 8 ticks higher, curve flattening, while

breakevens are 0.6-1.6bp tighter led by the 30-yr and swap spreads are circa

1.5bp wider across the board.