Gilts also holding onto modest gains...>

GILT SUMMARY: Gilts also holding onto modest gains as markets digest the tweaks

to BoJ monetary policy and higher than expected Eurozone inflation data. Yield

curve is slightly flatter as the ultra long-end outperforms the rest of the

curve.

- 2-yr Gilt yield is -1.3bp at 0.774%, 5-yr -1.6bp at 1.06%, 10-yr -1.4bp at

1.338%, 30-yr -1.5bp at 1.783% & 50-yr -2bp at 1.628% according to Tradeweb.

- Sep Gilt future opened sharply higher taking cue from rally in JGBs and US

Treasures overnight as London traders reacted to the small changes to the BoJ

monetary policy (introduction of forward guidance, continued YCC)

- The future faded though as BoJ Kuroda highlighted the wider trading band for

10-yr JGB yield and higher than expected French flash inflation. Confirmation of

higher then initially expected Eurozone CPI then helped push G U8 to intra day

low of 122.54, before buyers were seen coming in to lift the future to 122.63

- Short sterling strip has reversed earlier small gains to be pretty much

unchanged on the day, with markets focused on Fed FOMC and BoE MPC decisions

tomorrow and Thursday.