Gilts are trading modestly lower but...>

GILT SUMMARY: Gilts are trading modestly lower but are close to session highs

having bounced off earlier 'risk-on' induced lows as Eurozone flash inflation

remains below 2.0% level. Curve is pivoting around the 10-yr.

- 2-yr Gilt yield is +2.9bp at 0.641%, 5-yr +2.8bp at 0.972%, 10-yr +3.8bp at

1.263%, 30-yr +2.4bp at 1.716% & 50-yr +1.4bp at 1.516% according to Tradeweb.

- Overnight saw UK GfK consumer confidence tick higher to -7 in May wiping out

all of April's loss and reverting back to the the 12-month high set in March.

- While BoE lending data showed a slightly fall in number of mortgage approvals

however, net consumer credit rebounded after its sharp fall in March, rising to

stg1.832bn, with the bulk of the rise attributed to 'other' lending which

includes motor finance.

- Short sterling futures are steady to lower curve steeper as blue contracts

tick lower by 3-4 ticks, while white contracts are unchanged to 1 tick lower.

Volume though has been late.

- UK Breakevens are around 2bp wider across the board, while swaps spreads have

widened by around 1.5bps in the long end of the curve.