Despite PM Theresa May receiving.......>

GILT SUMMARY: Despite PM Theresa May receiving applause and encouragement from

her European counterparts in Brussels on Thursday Gilts rallied at the European

open. The Mar-18 10Y Gilt contract is currently trading 20 ticks higher at

125.49. It is a little surprising to see the rally in Gilts as it is largely

expected that the European Commission will conclude that sufficient progress has

been made to allow talks to progress to the next stage.

- According to chatter from traders it was noted that trading volumes this

morning was light and this could possibly explain the move higher in the Gilts.

- There seemed to to be a subtle risk-off feel in the market overnight and the

European markets appear to have followed this trend in early morning trade.

- At yesterday's BOE meeting policy makers were encouraged by the progress that

had been made in Brexit negotiations and saw it as a being possibly positive for

the UK economy, however, Gilt yields have reacted negatively to these comments.

- 2-yr Gilt yield is -1.3bp at 0.437%, 5-yr -1.6bp at 0.698%, 10-yr -2.3bp at

1.152% and 30-yr -1.9bp at 1.714%.