Gilts have squeezed higher led by a....>

GILT SUMMARY: Gilts have squeezed higher led by a 1.5bp lower move in the 10-yr,

albeit in very light pre-Christmas trade as markets wind down and despite a

surprise upward revision to annual UK GDP in the Third quarter.

- 2-yr Gilt yield is -1.4bp at 0.453%, 5-yr -1.6bp at 0.751%, 10-yr -1.9bp at

1.244% and 30-yr -1.8bp at 1.822%.

- For once it was European politics that made the headlines this morning, as

overnight Catalan separatists retained a small majority in the regional

elections, which seemed to give a lift to Gilts as they opened.

- Gilts initially ticked lower in reaction to annual GDP in the UK being revised

up to 1.7% y/y from 1.5% y/y. The quarterly figure for Q3 remained at 0.4% q/q

and probably masked a stronger performance in a number of sectors.

- IP, construction and business investment were all revised higher while net

trade exerted a neutral effect on growth. Countering this was downward revisions

to household spending and lower Govt spending

- 2-yr swap spreads have widen sharply by 5bps, however the rest are little

changed. While breakevens are wider led by the +0.7bp move in 5-yr and 10-yr