Gilts have squeezed higher in late.....>

GILT SUMMARY: Gilts have squeezed higher in late morning thin illiquid trade led

by the long-end, in-turn flattening the yield curve, despite slightly higher

than expected German regional flash inflation data.

- 2-yr Gilt yield is -0.5bp at 0.430%, 5-yr -0.8bp at 0.713%, 10-yr -1bp at

1.187%, 30-yr -2.1bp at 1.751% and 50-yr -1.8bp at 1.569% just ahead of early

1215GMT close.

- The squeeze higher occurred just before 1100GMT and appeared across the curve

with front-end of the short sterling strip bought in decent size, but the

long-end rallied more due to lack of liquidity.

- The rally in nominal gilts has outperformed linkers by around 1 basis point

and therefore breakevens have tightened. While swaps spread have barely changed

so far today.

- In swaps there has been some activity, however this has been limited to  a

5Y-10Y flattener and a 10Y-30Y steepener in small size.