Gilts have been under pressure from....>

GILT SUMMARY: Gilts have been under pressure from the get-go, led by sell-off in

the 5-yr to 10-yr sector, weighed by fall in German Bunds, but have managed to

bounce off session lows in last 30mins or so.

- 2-yr Gilt yield is +1.7bp at 0.81%, 5-yr +2.9bp at 1.166%, 10-yr +3.2bp at

1.479%, 30-yr +2.5bp at 1.899% and 50-yr +2.5bp at 1.70%.

- There has been a dearth of either UK or European data Monday, but comments

from central banker's has weighed on bond markets. ECB Villeroy came across

slightly hawkish, saying QE could end in Sep or Dec and a change in rates could

come quarters and not years afterwards. While Fed's Mester had a positive

outlook for the economy and said gradual rate hikes mean 3 to 4 hikes a year.

- In the UK attention remains on the divisions within the Tory cabinet on what

type of customs arrangement to try and negotiate with the EU, with a meeting set

for Tuesday to discuss latest developments. While Latest labour data will be

released tomorrow as well.

- Short Sterling strip is steady, curve steeper as blue contract fall 2 to 3

ticks. Breakevens are ~0.5bp wider, while swap spreads are little changed.