Gilts have opened steady to modestly higher...>

GILTS: Gilts have opened steady to modestly higher but lacking direction as

markets continue to digest the very weak UK preliminary Q1 GDP data released on

Friday and what implications this might have on BoE monetary policy. Gilt 10-yr

yield is -0.6bp at 1.446%, with curve bull steepening.

- News of another resignation in the Tory government doe not appear to be having

much impact the fixed income markets, however, Sterling has slipped versus the

Euro and the US Dollar. While equity markets are digesting the announcement of

the UK supermarket giant Sainsbury buying Walmart's Asda for Stg7.3bln.

Sainsbury's shares jump higher on the announcement.

- Looking ahead there is a dearth of UK data today so attention will be on

German flash HCIP and comments from BoE Haldane at 1000BST. Haldane comments are

from a talk he gave at King's College on April 19 and so unlikely to reference

the weak GDP data.

- Short sterling strip has reversed earlier tick higher and is now little

changed on the day, volumes though is very small.