Gilts have eked out a small rally......>

GILT SUMMARY: Gilts have eked out a small rally this morning likely on the back

of comments from BoJ Suga that they are watching the the currency markets with a

greater sense of a concern. 10-yr gilt yield is 1.5bp lower at 1.631% while the

yield curve is flatter with 2s/30s 0.6bp tighter.

- FT reports that the UK is ready to set out vision for financial services after

Brexit and prefers "mutual recognition" of regulations, according to sources.

There would be a dispute resolution mechanism set up to monitor market access

and impose conditions if either side break rules, the FT said.

- Looking ahead the main highlight will be release of UK Jan retail sales at

0930GMT. MNI median is for total sales to rise 0.5% m/m, although risk is seen

in either direction, so attention will be on the rolling 3-month average that

covers November and December sales as well. Later, PM May meets German

Chancellor Merkel in Berlin for talks which are likely to focus on Brexit. A

press conference is scheduled some time around 5pm.

- UK breakevens are around 0.4bp tighter across the curve while swap spreads are

modestly wider led by a 1.2bp higher move in the 2-yr.