Gilts really under pressure here with.........>

GILTS: Gilts really under pressure here with futures down more than 2.50 on the

day now (yields up 21.5bp at writing). Yields are now over 1%.

We think there are a combination of factors driving the move: the two most

prominent being:

- Concern that a London lockdown could happen as soon as the weekend.

- The weak 5-year auction today. We've now had wide tails on quite a few recent

auctions including both the 5-year and 30-year this week. We know that the DMO

remit didn't include all of the coronavirus mitigation measures so supply is

going to have to increase even further, so there's concern that unless we have a

decent QE programme the market will be over-supplied.

- We would also add that the UK is one of the largest bond markets in the world

that is not receiving explicit central bank intervention. The Fed and ECB are

now buying in size, but there is currently no central bank support in the UK.