Gilts extended gains in London.........>

GILT SUMMARY: Gilts extended gains in London afternoon session on

flight-to-quality bid as markets look to reduce risk ahead of the weekend

coupled with a number of European countries closed for Whit Monday Holiday as

well. The 5-yr to 10-yr part of the yield curve is leading the outperformance.

- 2-yr Gilt yield is -4.0bp at 0.821%, 5-yr -4.8bp at 1.185%, 10-yr -4.9bp at

1.51%, 30-yr -2.6bp at 1.913%, 50-yr -2.2bp at 1.702% according to Tradeweb.

- News in the afternoon that the leadership of one half of the potential Italian

coalition, Lega, has approved the programme then supported a further bout of

safe-haven buying.

- On a Morning short of any significant data releases attention has been on

Italy once again and the release of M5S and Lega final programme led to a mild

flight-to-quality bind in Bunds/core EGBs which Gilts duly followed.

- Short sterling strip is modestly flatter as blue contracts rise 4 ticks on the

day, while white contracts are steady to 1 tick higher.

- 2-yr swap spreads have widen by 4.4bp to 23.8bps, bouncing off recent lows.

While breakevens are touch tighter with curve flattening