Gilts edged higher at start of.........>

GILT SUMMARY: Gilts edged higher at start of London afternoon session but faded

lower after a couple of hours, weighed by upbeat US data and focus turning to

Fed Chair Powell 2nd testimony on Capital Hill, but hang on to earlier gains led

by the 10-yr part of the yield curve.

- 2-yr Gilt yield is -1.8bp at 0.760%, 5-yr -3.4bp at 1.121%, 10-yr -4bp at

1.46%, 30-yr -2.6bp at 1.868% and 50-yr -2bp at 1.647%.

- Gilts edged higher in tandem with German Bunds and US Treasuries at start of

NY session, however pared gains as initial jobless claims edged lower and

personal income ticked higher. Surprise rise in US ISM manufacturing also then

weighed before Gilt stabilised at pre-lunch highs.

- Earlier, Gilts steadily rose, underpinned by continued Brexit concerns (May to

meet Tusk, Davis says will not pay Brexit bill unless EU backs down on

N.Ireland) and mild risk-off flows. UK data only had temporary negative impact

on Gilts before they squeezed higher after solid 5-yr re-opening auction.

- Breakevens are circa 1bp tighter while swap spreads are ~1.5bp wider