Gilts have rallied since Wednesday's...>

GILT SUMMARY: Gilts have rallied since Wednesday's closing price, supported by

dovish interpretation of Riksbank statement, but remain in check following a

disappointing 5-yr Gilt auction. Curve is slightly flatter as very short-end

lags move higher in the long/ultra long-end.

- 2-yr yield is -0.8bp at 0.756%, 5-yr -1.3bp at 1.047%, 10-yr -1.6bp at 1.451%,

30-yr -1.6bp at 1.813% & 50-yr -1.7bp at 1.682% according to Tradeweb

- Dec Gilt future opened modestly higher underpinned by counter comments from a

German official to the Bloomberg Brexit story released yesterday and then hit

session high of 122.23 as Riskbank pushed back possible timing of a rate hike.

- The rally was limited though as markets looked ahead to a raft of bond supply

from Spain, France and UK. Gilts then came under selling pressure as the tail at

the UK 5-yr Gilt auction rose sharply to 0.4bp from 0.1bp. G Z8 last at 122.14

- Short sterling futures have edged higher, with strip steeper as green and blue

contracts rise by 2 ticks while whites are steady to +1 tick.

- Attention now turns to a raft of US data, including ISM non-mfg, factory

orders and ADP. Raab and Barneir might also give update on Brexit negotiations.