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

GILT SUMMARY: Gilts are trading mixed with the yield curve flatter as the

short-end comes under most selling pressure despite UK CPI inflation falling

more than expected, as some are highlighting rise in domestic cost pressure and

with real wage growth likely to be positive in the next few months which could

also lead to rise in consumer spending.

- 2-yr Gilt yield is +2.3bp at 0.85%, 5-yr +2.5bp at 1.177%, 10-yr +1.5bp at

1.458%, 30-yr -0.4bp at 1.776% and 50-yr -0.6bp at 1.554% according to Tradeweb.

- Gilts opened on the back foot as markets continue to digest the implications

of the Brexit transitional agreement and reports that Trump might levy $60bln of

import tariffs on China by Friday.

- June Gilt future initially spiked higher by 20 ticks in knee-jerk reaction Feb

CPI falling to 2.7% y//y from 3.0% y/y, but quickly pared gains and eventually

squeezed lower as prospect of positive real wage growth looks set to turn

positive earlier than expected and the likely impact this will have on BoE

monetary policy. Gilts did pare some losses but remain heavy.

- Breakevens are surprisingly steady, swap spreads though are modestly tighter