Gilts saw strong 2-way flow in the.....>

GILT SUMMARY: Gilts saw strong 2-way flow in the aftermath of US Jobs report,

but look set to close steady to lower with yield curve flattening as the

short-end takes brunt of afternoon sell-off.

- 2-yr gilt yield is +1.9bp at 0.779%, 5-yr +1.6bp at 1.102%, 10-yr +0.1bp at

1.392%, 30-yr +0.6bp at 1.819% and 50-yr -0.1bp at 1.614% according to Tradeweb.

- June Gilt future spiked to intra-day high of 122.94 in knee-jerk reaction to

US jobs report which showed non-farm payrolls rise by less than expected and

growth in average weekly earnings drop by 0.1%.

- Gilts pared gains pretty quickly though and traded close to session low of

122.58 as markets took note of fall in the unemployment rate to 3.9% and the

curve started to steepen as short-end came under greater pressure.

- Movement in the Short Sterling strip has been limited to a couple of ticks

either higher or lower and look set to close on the soft side with green and

blue contracts down 1 to 2 ticks.

- 5-yr & 10-yr breakevens are circa 1bp wider as sterling extends falls vs US

Dollar, while swap spreads are mixed with 2-yr 1.7bp tighter.