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

GILT SUMMARY: Gilts have opened modestly higher Tuesday with the yields around

0.8bp lower across the curve, likely supported by comments from BOE Silvana

Tenreyro last night and newswire reports of a tougher stance from the EU on any

transitional deal. UK 10-yr Gilt yield is 0.9bp lower at 1.314%.

- Tenreyro said Monday she anticipated a couple more Bank Rate hikes in the next

3-years if the economy were to evolve in line with the MPC's central forecast.

However added that with productivity risk skewed to the upside compared to BoE's

low target the path of interest rates could be altered. If productivity turned

out stronger than BoE forecasts would suggest an even lower path for Bank Rate

Tenreyro added.

- The FT has reported on a draft of Brexit transition conditions by the EU that

it has seen and says the EU has toughened its stance and requires the UK to

adhere to stricter terms on immigration, external trade agreements and fishing

rights for the whole of the transitional period.

- Main attention this morning will be release of December inflation and PPI data

at 0930GMT with consensus seeing a slight fall to 3.0% y/y from 3.1% for CPI.