Gilts are languishing near session.....>

GILT SUMMARY: Gilts are languishing near session lows, having reversed modest

squeeze higher, taking cue from fall in German Bunds following release of German

state flash inflation data. The 10-yr part of the yield curve is seen leading

the move lower.

- 2-yr Gilt yield is +1.6bp at 0.818%, 5-yr +1.8bp at 1.192%, 10-yr +2.4bp at

1.533%, 30-yr +1.3bp at 1.922% and 50-yr +1bp at 1.70%.

- Market initially found a small bid as BoE Jon Cunliffe did not touch on

monetary policy in his speech last night, while markets looked ahead to Fed

Chair Powell testimony.

- Gilts faded lower though, taking cue from sell-off in German Bunds which

reacted to German State flash CPI numbers and upbeat lending data. Gilts though

appeared underpinned by continued Brexit concerns, as pressure builds on PM May

once again. EU said it will release a draft Brexit treaty on Wednesday that's is

likely to cause problems within May's own party and raise the thorny N.Ireland

and Ireland boarder issue.

- Breakevens are steady to 2bp wider as 30-yr linkers squeeze higher.