Gilts are trading mixed once again.....>

GILT SUMMARY: Gilts are trading mixed once again with the long-end outperforming

following solid 10-year Gilt auction and therefore flattening the yield curve.

While the short-end is seen weighed by upbeat UK manufacturing PMI and BoE Super

Thursday.

- 2-yr Gilt yield is +0.4bp at 0.273%, 5-yr +0.6bp at 0.597%, 10-yr -1.0bp at

1.22% and 30-yr -1.4bp at 1.849% according to Tradeweb.

- Gilts opened lower however, taking cue from soft US Treasuries overnight,

continued strength in the pound vs US Dollar and the upcoming 10-yr Gilt

re-opening auction for Stg2.25bln.

- Gilts then saw some selling in wake of stronger than expected UK mfg PMI (55.1

vs consensus of 54.4), but quickly recovered in run-up to 10-yr Gilt auction

close with primary dealers seeing good demand.

- The good demand at the auction was confirmed with demand coming in at 2.56

times vs 2.28 previously which supported another move higher in Gilts. But some

profit taking saw Gilt fade off session highs.

- Swap spreads are little changed while 5-yr & 10-yr breakevens are 1bp wider.