Gilts are trading mixed with the.......>

GILT SUMMARY: Gilts are trading mixed with the short-end seen weighed by better

than expected UK service PMI data, while the remainder of the curve, especially

the 10-year part continues to find support from Thursday BoE "dovish rate hike".

- 2-yr/1-yr yield spread is 3.7bp flatter, while 10-yr/30-yr yield spread is 1bp

steeper with 10-yr yield -0.9bp at 1.252% according to Tradeweb.

- Some analysts see the markets over reacting to the decision and subsequent

dovish interpretation of the MPC minutes and quarterly inflation report and see

risk that rates could rise for a second time in Q2 2018 compared to current

market pricing of Q4 2018.

- BoE Broadbent was on BBC radio 4 this morning and said that he thought rates

would need to rise 2 more times to get inflation back on track, supporting the

consensus view on the MPC, however sounded cautious on UK's economic outlook.

- A surprise rise in UK Oct service PMI to 55.6 from 53.6 seen in Sep had a

large impact on the short-end of the curve with yields rising over 3bps.

- 30-yr breakevens are nearly 1bp tighter while swap spreads are little changed

with the exception of the 2-yr which is 1.9bp tighter.