Gilts have opened on the soft side, but are...>

GILTS: Gilts have opened on the soft side, but are seen lacking direction,

waiting for key UK inflation data to be released at 0930BST. UK 10-yr gilt yield

is +0.1bp at 1.393%, curve ever so slightly bear flattening.

- May government managed to win key vote on the "meaningful vote" in the House

of Commons yesterday but only after having to make late concessions to Tory

rebels. Details of the concessions are vague and the rebel MPs are already

saying that PM May must honour assurances over parliament's role.

- Main event in the UK today will be release of inflation data for May. MNI

Median forecast of for headline rate to rise to 2.5% y/y from 2.4% y/y, but for

core to remain at 2.1% y/y. Pass through of recent rise in oil prices is seen as

the key factor in determining today's CPI numbers. Services inflation is another

key number to keep an eye on.

- A strong CPI number is seen increasing the chances of an August rate hike,

which currently stands at 54% according to MNI PINCH.

- Short sterling strip is mixed, curve touch flatter as blues are steady to 1

tick higher while white and reds steady to 1 tick lower.