EGBs/GILTS: The Bank of England's......>

BOND SUMMARY: EGBs/GILTS: The Bank of England's emergency 50bp bank rate cut,

coupled with measures aimed at boosting lending to the SME sector, have been the

dominant story this morning. The UK January economic data (monthly GDP,

industrial production, index of services, trade and construction) was a

sideshow).

- The short sterling curve has flattened on the BoE decision with the front

contract up 17 ticks.

- While the short end of the gilt curve has firmed on the back of the BoE move,

the longer end has sold off on the expectation of a significant fiscal boost in

today's budget. 40y- and 50-year yields are up 13bps. 

- Italy is similarly paving the way for a substantial fiscal boost. BTPs have

rallied this morning with yields broadly 10-15bp lower with the 5-year

marginally outperforming.

- Core eurozone govvies have sold off. Bund yields are 1-3bp higher on the day.

- It is a similar story for French OATs. Current yield levels: 2-year -0.796%,

5-year -0.556%, 10-year -0.273%, 30-year 0.314%.