Gilts are trading steady to higher,....>

GILT SUMMARY: Gilts are trading steady to higher, curve flatter as the long-end

outperforms and the short-end is held back by rise in oil and copper prices

since last Friday, albeit in very light illiquid trade.

- 2-yr Gilt yield is unch at 0.45%, 5-yr -0.3bp at 0.744%, 10-yr -2bp at 1.221%,

30-yr -1.8bp at 1.802% and 50-yr -1.8bp at 1.614%.

- Gilt future actually opened a few ticks lower than Friday's settlement price,

however very quickly reversed losses and squeezed higher. Volume was very low

though with only 10k contracts being traded in first 45 mins of trade.

- Markets talk of small rise in geo-political risk following new US sanctions on

North Korea. While sharp rise in oil price due to pipeline explosion in Libya

and continued rise in copper raised inflation concerns and possible quicker Fed

rate hikes for 2018.

- Early indications from UK retail over Christmas showed sharp fall in people

visiting shopping centres and the high street, while a report said that UK's pay

squeeze will end next year but any meaningful pay rise still to be seen.

- Breakevens are surprisingly steady, while swap spreads are marginally wider.