Gilts slipped to fresh intraday lows...>

GILT SUMMARY: Gilts slipped to fresh intraday lows at start of afternoon session

and traded in narrow lower range thereafter as market awaits key Fed FOMC

monetary policy decision. Yield curve has bear flattened today as short-end came

under heavy selling pressure following upbeat UK labour data.

- 2-yr Gilt yield hit session high of 0.958%, highest level since May 27, 2011,

before paring losses to last trade +5.8bp at 0.936%. 5-yr is +6.4bp at 1.268%,

10-yr +5.6bp at 1.542%, 30-yr +3.2bp at 1.822% and 50-yr +2.5bp at 1.588%

according to Tradeweb.

- Earlier Gilts got slammed as UK unemployment rate fell back down to 4.3%

helped by a 168k rise in employment between Dec and Feb, while average weekly

earnings rose more than expected to 2.8%. Overall data this week points to no

reason why the BoE should not raise rates in May and markets focus appears to be

on the likelihood of a second 25bp rate hike by the end of 2018.

- Selling was then seen in the 10-yr sector as BoE bought Gilts at avg 2.3cent

discount in latest APF repurchases op, but managed to claw back some losses.

- Breakevens are wider led by +3bp in the 5-yr, swap spreads are little changed