Gilts have pared earlier gains to......>

GILT SUMMARY: Gilts have pared earlier gains to trade little changed from

Thursday closing levels with the exception of the 2-yr which is underperforming

the rest of the curve ahead of key US non-farm payroll data.

- Markets seemed to have dismissed the soft Eurozone flash core CPI number,

renewed concerns over UK consumers and sharp drop in unit labour costs.

- 2-yr Gilt yield is +0.6bp at 0.498%, 5-yr +0.2bp at 0.755%, 10-yr -0.4bp at

1.230%, 30-yr -0.1bp at 1.780% and 50-yr -0.1bp at 1.582%.

- March Gilt future was trading little changed from Thursdays settlement price,

but suddenly rallied over 20 ticks, more than likely supported by large 4,250 G

H8 future block and confirmation of sharp drop in UK car sales for 2017. Sharp

drop in UK unit labour costs also initially support Gilts.

- Gilts actually pared gains though in wake of Eurozone flash core CPI coming in

at 0.9% y/y vs expectations of 1.0% y/y.

- 5-yr breakevens have risen above its 100-DMA and are trading 2.1bp wider at

2.976%, while 2-yr swaps spreads are 3.7bp tighter at 29.4bps.

- Attention now turns to US non-farm payroll and average weekly earnings data.