Gilts have seen a little bit more 2-way.......>

GILTS: Gilts have seen a little bit more 2-way flow compared to Bunds and US

Treasuries, however are currently trading close to session lows, as tension in

Italian politics eases and German regional flash inflation surprises to the

upside. Curve is currently pivoting around the 10-yr point.

- 2-yr Gilt yield is +0.4bp at 0.632%, 5-yr +0.7bp at 0.966%, 10-yr +1.9bp at

1.25%, 30-yr +1.1bp at 1.719% & 50-yr +0.6bp at 1.531% according to Tradeweb.

- Sep Gilt future opened higher, but immediately dropped lower, weighed by fall

in German Bunds and US Treasuries as markets digested latest political

developments in Italy and pared recent flight-to-quality bid. Higher thane

expected rise in German regional flash inflation, better retail sales data and

fall in German unemployment rate all added downward pressure.

- Gilts recovered though on sudden buying interest on lack of clarity from

Italy, before sliding lower once more as BTPs gained extra bid on news that

Italy was looking likely to go the polls once again.

- Short sterling strip is steady to lower, curve steeper as green and reds fall

2 to 3 ticks. While breakevens are circa 1bp wider.