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Gilts have recovered earlier losses....>

GILT SUMMARY
GILT SUMMARY: Gilts have recovered earlier losses and are now trading higher led
by the outperformance of the ultra-long end and in turn flattening the yield
curve, as DMO receives strong demand for new 2048 Gilt Linker and markets report
strong buying in futures.
- 2-yr Gilt yield is -2.2bp at 0.424%, 5-yr -2.1bps at 0.687%, 10-yr -2.3bp at
1.234% and 30-yr -2.9bp at 1.821% according to Tradeweb
- Earlier Gilts dipped lower weighed by European bond supply, announcement of
2048 IL Gilt syndication and rally in US Dollar which forced US Treasuries
lower.
- Gilts recovered though, underpinned by strong demand at Austria, German, EFSF
dual trance and UK linker supply, and then spiked higher on strong bid in
futures.
- UK received over Stg25bln in orders for the new Stg3bln 0.125% Aug 2048 IL
Gilt with spread set at UKTi 0.75% Nov 2047 +1bps.
- UK breakevens are around 2.5bp wider as IL Gilts get a boost from solid 2048
IL syndication. While 2-yr swaps spreads are leading the widening move at +3bp.

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