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

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

flattening as the short-end underperforms versus the long/ultra long-end

following mixed UK labour report. Gilts also seen weighed by move lower in

German Bunds.

- 2-yr Gilt yield is +3.2bp at 0.779%, 5-yr +2.6bp at 1.127%, 10-yr +2.2bp at

1.428%, 30-yr +1.4bp at 1.879% & 50-yr +1.5bp at 1.716% according to Tradeweb.

- Sep Gilt future slipped to intra-day low of 121.33 as markets reacted to soft

opening in German Bunds and prepared for UK labour report for April. Trump/Kim

meeting generated a number of headlines but had little impact on markets.

- UK jobs data was mixed with the rise in employment surprising to the upside,

rising 141k but with wage growth ex bonus slipping to 2.8% from 2.9%. Overall

data weighed on the short-end of the curve more than the long-end.

- Sep Gilts also got a small boost from announcement of Justice minister Phillip

lee resigning from May's cabinet due to Brexit.

- Short sterling is trading steady to lower, curve touch steeper as blues are 1

to 2 ticks lower. 2-yr & 5-yr swap spreads are 1bp tighter, 5-yr breakeven +1bp.