Gilts opened lower, recovered losses...>

GILT SUMMARY: Gilts opened lower, recovered losses in wake of soft German Ifo

and surprise downward revision to UK Q4 2017 GDP, but have now slipped lower

once more led by the short-end of the curve as markets looks to NY open.

- 2-yr Gilt yield is +1.4bp at 0.689%, 5-yr +1.3bp at 1.056%. 10-yr +1.3bp at

1.568%, 30-yr +1.2bp at 1.952% and 50-yr +0.9bp at 1.736%.

- Gilts opened lower reacting to the slight hawkish take on Fed Jan FOMC meeting

minutes and sharp fall seen in US Treasuries after European close.

- Gilts faded losses though, taking cue from recovery in German Bunds following

weaker than expected German Ifo data showing a cooling in business climate and

then rallied to session highs in wake of UK 2nd estimate of Q4 2017 GDP being

cut to 0.4% q/q from 0.5% q/q. Overall for 2017 growth was revised down to 1.7%

from 1.8% and the slowest growth since 2012.

- Gilt Linkers have been under pressure this morning with some it probably due

to tap of 0.125% Mar 2036 Il Gilt for Stg950mln and some to expectations of

lower inflation. Breakevens are tighter by around 2bps across the curve.

- 2-yr & 5-yr swap spreads are 2.7bp & 1.3bp tighter respectively.