Gilts recovered from intra-day lows....>

GILT SUMMARY: Gilts recovered from intra-day lows in London afternoon trade with

2s/10s touch steeper but 10s/30s slightly flatter as US data came in on the soft

side of expectations and Italy political headlines dry up.

- 2-yr Gilt yield is -0.8bp at 0.62%, 5-yr -0.7bp at 0.952%, 10-yr +0.3bp at

1.234%, 30-yr -0.6bp at 1.702% & 50-yr -1.3bp at 1.512% according to Tradeweb.

- Gilts slipped to fresh lows as NY traders got to their desks but quickly

turned around started long road to recovery, supported by soft US ADP numbers

and surprise downside revision to US Q1 GDP. Core PCE falling to 2.3% q/q from

2.5% q/q also supported recovery in Gilts.

- The number of newswire headlines on Italian politics dropped significantly in

the afternoon and markets wait on next move either formation of some form of

government or announcement of fresh elections.

- Short sterling strip has recovered earlier slight losses and is now steady to

higher, curve touch flatter as blue contracts are steady to 2 ticks higher.

Breakevens remain circa 1bp wider, while swap spreads have also widened by 1bp

- Tomorrow sees latest UK GfK consumer confidence and BoE mortgage approvals