Gilts have opened modestly higher......>

GILT SUMMARY: Gilts have opened modestly higher with yields in the region of 1bp

across the board, taking cue from mild recovery in US Treasuries after London

close on Friday. While news that Carillion has filed for liquidation is also

seen pushing up domestic political risks. 10-yr gilt yield is 1.3bp lower at

1.326%.

- Markets are likely to be pushed around by political events in both London And

Berlin and any syndication announcements today due to the lack of UK and

Eurozone data to drive markets. While the US cash markets are closed due to

Martin Luther King Jr holiday day.

- The liquidation of Carillion could impact politics in the UK due to its size

and operations of having many contracts in the public sector including NHS and

schools.

- Breakevens have opened wider with the 5-yr 0.7bp tighter despite crude oil

rising to a near 3-year high, as cable trades above $1.37.

- Looking further ahead Bank of England MOPC member Silvana Tenreyro will speak

in London on the fall in productivity at 1815GMT.