Gilts opened marginally lower but......>

GILT SUMMARY: Gilts opened marginally lower but very quickly reversed higher

steadying the sharp sell-off seen yesterday. Stocks in Asia were generally

higher despite Japan being closed for a second day, however sabre rattling from

President Trump over North Korea are giving markets a slight safe-haven bid so

far this morning. 10-yr Gilt yield is 1bp lower at 1.278%.

- News of Britain holding informal talks about joining TPP has had little impact

on investors as this is seen as something for another day. UK construction PMI

and more importantly US ISM manufacturing and release of Fed FOMC meeting

minutes are all more pressing issues that is likely to influence markets in the

very near term.

- Attention also likely on European bond supply, with Ireland expected to launch

a new 10-yr syndicated deal today. 

- UK breakevens are little changed so far Wednesday, while swap spreads are

marginally tighter with the exception of the 2-yr which is 2.1bp wider at

32.5bps.