Gilts look set to close modestly.......>

GILT SUMMARY: Gilts look set to close modestly lower with the belly of the yield

curve hit the hardest, taking cue from moves in German Bunds as ECB President

Mario Draghi does not push back against recent rally in the Euro and sounded

confident on the Eurozone economy.

- There was obviously less reaction in Gilts than EGB markets to the

(less-dovish) comments from ECB President Draghi, none-the-less, Gilts remained

in negative territory going into Thursday close.

- 2-yr Gilt yield is +0.5bp at 0.595%, 5-yr +1.4bp at 0.934%, 10-yr +1.2bp at

1.418%, 30-yr +0.2bp at 1.891%, and 50-yr +0.5bp at 1.674%.

- Earlier the Gilt future opened higher taking cue from overnight risk-off

sentiment and then spiked to session high, before dropping into negative

territory despite sharp drop in mortgage approvals. Disappointing UK CBI Jan

sales growth then led a recovery in Gilts only for Draghi Comments to weigh in

the afternoon.

- 5-yr and 10-yr breakevens are 2.5bp tighter but the 30-ye is only tighter by

0.4bnps, while swap spreads are mixed once again with 2-yr 5.8bp wider at 34.9bp