Gilts ended a short Friday session.....>

GILT SUMMARY: Gilts ended a short Friday session higher with yield curve

shifting circa 2bp lower albeit in very thin pre-Christmas trade, despite

positive under tones of UK final Q3 GDP data and US house passing short-term

funding Bill. 10-yr Gilt yield finished 2bp lower at 1.24%.

- For once it was European politics that made the headlines this morning, as

overnight Catalan separatists retained a small majority. While markets were

unaffected by US funding deadline extended for 3-week.

- Gilts initially ticked lower in reaction to annual GDP in the UK being revised

up to 1.7% y/y from 1.5% y/y. The quarterly figure for Q3 remained at 0.4% q/q

and probably masked a stronger performance in a number of sectors.

- 2-yr swap spreads widen sharply by 5.3bps, however the rest closed little

changed. While breakevens widened led by the +0.6bp move in 5-yr and 10-yr.

- Next week will be a short working week with markets expected to be very thin

and illiquid as many traders extend Christmas holidays and come back refreshed

for start of 2018.