Gilts are languishing near session.....>

GILT SUMMARY: Gilts are languishing near session lows having faded earlier

opening moves as DMO surprises the market by rising Gilt issuance and IL Gilt

re-opening auction comes in a tad soft. Yield curve is steeper as short-end

underperforms as extra Gilt issuance is skewed to the short/medium end.

- 2-yr Gilt yield is +1.2bp at 0.863%, 5-yr +1.2bp at 1.2%, 10-yr +0.1 at

1.523%, 30-yr -0.4bp at 1.926% and 50-yr -0.4bp at 1.731% according to Tradeweb.

- June Gilt future opened modestly higher taking cue from higher move in US Tsys

and German Bunds as 10-yr US Tsy yield edged away from 3% level overnight.

- Gilts faded lower though as the DMO announced surprise Stg3.1bln rise in

planned Gilt issuance despite better than expected public sector borrowing

numbers for March due to a more negative outturn from "other financing items".

Stg1.4bln of the increase is planned for the short-medium end of the curve.

- Sharp fall in the business optimism of the CBI trends survey then saw Gilts

bounce off session lows but remain in lower bound range.

- DMO sold Stg750mln 2048 IL Gilt but demand was on the low side but this has

not stopped 30-yr breakevens widening by 0.8bp s