Gilts are trading modestly lower.......>

GILT SUMMARY: Gilts are trading modestly lower with the yield curve bear

flattening as the short-end underperforms, likely weighed by mixed UK labour

market survey. While long-end under pressure from fall in German Bund and 2036

IL Gilt re-opening auction, albeit in light illiquid trade.

- 2-yr Gilt yield is +2.0bp at 0.491%, 5-yr +1.8bp at 0.746%, 10-yr +1.3bp at

1.236% and 30-yr +1.3bp at 1.811% according to Tradeweb.

- Gilts actually opened modestly higher with the yield curve shifting around 1bp

lower across the curve as Tory rebels look to defeat the government in the House

of Commons on an amendment to the EU Withdrawal Bill.

- Markets turnaround shortly before release of UK data however, led by sell-off

in German Bunds and then dropped lower possibly on risk of higher Gilt issuance

following large drop in employment. While short end was likely weighed by rise

in average weekly earnings to 2.5%

- Gilt future spiked to session low in wake of 2036 IL Gilt auction possible on

back of a 500 lot Gilt block sale, but quickly recovered in light buying.

- Attention now turning to US CPI data and FOMC rate decision this evening.