Gilts have been under pressure since...>

GILT SUMMARY: Gilts have been under pressure since the get-go Tuesday and are

trading close to intra-day lows, weighed by surprise tick higher in UK inflation

and reduction in UK political uncertainty, with the 10-yr part of the yield

Curve underperforming

- 2-yr Gilt yield is +0.9bp at 0.472%, 5-yr +1.6bp at 0.728%, 10-yr +2.2bp at

1.225% and 30-yr +1.9bp at 1.805% according to Tradeweb.

- Mar Gilt future actually opened a couple of ticks higher compared to Monday's

close with 10-yr Gilt yield touching low of 1.201%. The future very quickly

dropped lower however, likely weighed by perceptions UK government and PM May

for that matter looking slightly more stable than a few months ago. A YouGov

poll for The Times showed the Conservatives having a 1% lead over Labour, the

first since the election as PM May's Brexit deal improved her popularity among

voters.

- UK headline inflation rose to 3.1% in Nov, above consensus for a steady 3.0%

print and means BoE Governor Carney has to write a letter to the Chancellor.

- As expected 10Y & 30Y breakevens are 1.2bp wider, while swap spreads tighter