Gilts are trading modestly higher......>

GILT SUMMARY: Gilts are trading modestly higher with yields between 0.5bp to

1.3bp lower with the long-end seen favoured the most with a dearth of UK data or

comments from officials to direct markets.

- 2-yr Gilt yield -1.3bp at 0.567%, 5-yr -0.7bp at 0.831%, 10-yr -0.7bp at

1.295%, 30-yr -1.0bp at 1.804% & 50-yr -1.2bp at 1.589%.

- This could change shortly though as BoE MPC member Michael Saunders gives a

talk at the launch of Financial Intermediary and Broker Association at 1145GMT.

Saunders was one of the first members to call for a rate hike last year and a

clear hawk on the MPC, so his comments today could be of interest to the markets

on likely future path of rates.

- Domestic politics is never dull for too long and the performance of PM May at

Prime Minister Questions and the progress of the EU Withdrawal Bill later today

will be keenly watched. Meanwhile Brussels continues to try and get the UK to

change its mind and not leave the EU.

- Breakevens are tighter led by -1.9bp move in the 10-yr, while swap spreads are

marginally tighter.