Gilts attempted a recovery in London...>

GILT SUMMARY: Gilts attempted a recovery in London afternoon trade but look set

to close modestly lower led by the 10-yr part of the yield curve as EGB supply

and risk-on sentiment prevailed. 2s/10s is 0.9bp steeper while 10s/30s is 0.8bp

flatter.

- 2-yr Gilt yield +1.4bp at 0.587%, 5-yr +2.0bp at 0.862%, 10-yr +2.4bp at

1.331%, 30-yr +1.7bp at 1.832% & 50-yr +1.2bp at 1.614%.

- 5-yr part of the yield curve recovered from an early morning supply related

sell-off as tail ticked lower to 0.2bp from 0.3bp at the auction

- Markets attention remains on Brexit and upcoming BoE MPC decision in 3-weeks

time. But with Brexit transitional talks not yet started and little in the way

of differing views from MPC members Gilts have lacked directional moves.

- UK Prime Minister May and French President Macron are meeting in Sandhurst, UK

and are expected to talk about Brexit, security and boarder checks at Calais.

- Breakevens are trading mixed with 5-yr 1.9bp tighter, while 10-yr is unchanged

and 30-yr 1bp wider. Majority of swaps spreads are a touch wider with exception

of the 2-yr which is slightly tighter.