Eventually the selling in EGB's........>

GILT SUMMARY: Eventually the selling in EGB's coupled with strong US domestic

demand/durable goods data and hope of a Brexit transition deal by end of March

weighed on Gilts, led by short-end and in turn bear flattening the yield curve.

- 2-yr Gilt yield is +2.8bp at 0.627%, 5-yr +2.5bp at 0.954%, 10-yr +1.5bp at

1.426%, 30-yr +0.1bp at 1.886% and 50-yr +0.3bp at 1.671%.

- The 10-yr to 30-yr part of the yield curve initially held up well against a

surprise rise in Q4 GDP data (0.5% q/q vs 0.4% q/q) and some very strong selling

in the short-end of the German curve. But eventually succumbed and reversed

gains shortly after start of NY session.

- US GDP miss masked strong domestic demand and was further offset by positive

surprise in durable goods data. Comments from Brexit Secretary David Davis that

he is confident a political agreement on a transitional deal can be reached by

March EU council meeting also weighed on Gilts in the afternoon.

- Breakevens are between 1.4bp and 2.4bp wider led by 30-yr sector, while swap

spreads are modestly wider apart from the 2-yr which is 5.3bp tighter at 29.7bps

reversing yesterday's move higher.