Gilts are trading steady to modestly...>

GILT SUMMARY: Gilts are trading steady to modestly higher, led by 1.3bp fall in

10-yr yield following in-line UK industrial production data and market

positioning ahead of BoE monetary policy decision and release of latest

quarterly inflation report.

- 2-yr Gilt yield is -0.1bp at 0.82%, 5-yr -0.8bp at 1.164%, 10-yr -1.7bp at

1.449%, 30-yr -0.9bp at 1.866% and 50-yr -0.5bp at 1.66% according to Tradeweb.

- June Gilt future opened 13 ticks higher but quickly reversed gains before UK

IP and trade balance data release following some light selling. But with little

seen too trigger the fall, future contract recovered and then edged higher in

wake of UK data that did not alter the view that the cold snap in March did not

effect UK economy too much.

- Short sterling has seen some decent 2-way flow and are currently mixed ahead

of BoE decision, with markets bracing themselves for a possible hawkish hold

with vote remaining at 7-2 but with hawkish undertones. Risks are seen skewed to

a 6-3 vote.

-  Breakevens are 0.5-1.0bp wider while swap spreads are little changed.