Gilts look to close only marginally....>

GILT SUMMARY: Gilts look to close only marginally higher having recovered from

earlier losses underpinned by rise in US/EU trade tensions and renewed Deutsche

Bank concerns. Curve is ever so slightly steeper.

- 2-yr Gilt yield is -0.4bp at 0.607%, 5-yr -0.3bp at 0.941%, 10-yr -0.3bp at

1.222%, 30-yr unch at 1.693% & 50-yr unch at 1.501% according to Tradeweb.

- US announced that the EU, Canada and Mexico will be subjected to steel and

aluminium tariffs as of tonight, causing the EU and Mexico to say they are

likely to retaliate with their own tariffs. Underpinned recovery in Gilts

- News that DB US business is on US FDUC problem bank list also aided recovery.

- Earlier Gilts slipped lower on back of continued risk-on sentiment as markets

waited for update on Italy political situation and amid concerns over rising

inflation in the Eurozone. There was a mild relief rally though as EMU flash CPI

came below 2.0%.

- Short sterling strip has also pared earlier losses and is now mixed, curve

touch flatter, albeit in low volume. UK breakevens are circa 2bp wider, while

swap spreads are a touch higher.