Gilts are trading mixed head of BoE....>

GILT SUMMARY: Gilts are trading mixed head of BoE monetary policy decision

announcement with the yield curve pivoting around the 5-yr part as strong UK

retail sales and surprise rise in Eurozone flash PMI's weigh on the short end.

- 2-yr Gilt yield is +2.1bp at 0.500%, 5-yr +2.3bp at 0.759%, 10-yr +0.7bp at

1.220% and 30-yr unchanged at 1.785% according to Tradeweb.

- Gilts actually opened marginally higher as markets digested FOMC rate hike and

updated projections and edge higher in domestic political risk as government

losses key vote on amendment to EU Withdrawal Bill.

- Gilts came under pressure pretty quickly however, as flash PMI data from

France and Germany pushed Bunds lower and then UK retail sales increased more

than forecast in November due to Black Friday boost

- The long-end of the curve started to recover losses as markets expected

pay-back on retail sales next month and they looked ahead to BoE & ECB decision.

- BoE is widely expected to vote 9-0 for rates and QE to be unchanged, so

attention likely on any change to wording in the minutes. While ECB is also seen

holding policy/forward guidance steady with attention on Staff forecasts.