Gilts looks to close Friday lower......>

GILT SUMMARY: Gilts looks to close Friday lower reversing some of their gains

seen after BoE monetary policy decision yesterday as the EU is given a temporary

exemption from US steel and aluminium tariffs and following recovery in UK/EU

and US equities. Yield curve is steeper as the long/ultra long-end of the curve

comes under the most selling pressure.

- 2-yr Gilt yield is +1.9bp at 0.900%, 5-yr +3.3bp at 1.206%, 10-yr +3.6bp at

1.453%, 30-yr +4.6bp at 1.767% and 50-yr +5.1bp at 1.546% according to Tradeweb.

- Having tightened for 12 session in a row and by 31.5bps, 2s/30s has finally

widened today with the spread 2.2bps higher to 86.4bps.

- There was a dearth of UK data today, however at the EU summit in Brussels they

rubber stamp the Brexit transition deal and agreed negotiation position for

trade talks and backed Pm May on Russia.

- BOE MPC member Gertjan Vlieghe said that the UK's tight labour market is

putting upward pressure on domestic inflation and the outlook is consistent with

one or two rate hikes per year over the three-year forecast horizon.

- Breakevens jumped higher with 5-yr +3bp, 10-yr +2.5bp & 30-yr +1.5bp