Gilts slowly grinded there way back after.....>

GILTS: Gilts slowly grinded there way back after suffering heavy losses earlier,

possibly supported by two Gilt future blocks at 120.64 and 120.68 both for 2k

each, but remain lower. Topping out of European equities and bounce in US Dollar

aided recovery in a mild return to risk-off flow. Volumes have been high with

Gilt future trading 40% above average.

- 2-yr Gilt yield is +0.9bp at 0.813%, 5-yr +2.2bp at 1.175%, 10-yr +2.5bp at

1.521%, 30-yr +2.1bp at 1.929% and 50-yr 2.3bp at 1.712%.

- Gilts were lower from the get-go weighed by overnight easing of possible trade

war. Gilts then slipped lower pressured by unwind of Italy bearish trades,

upcoming 30-yr Gilt supply and announcement from UK supermarket Sainsbury's that

they will raise store worker wages by 15%. Newswire headlines that N.Korea can

discuss denuclearisation if regime safety agreed, with plans to hold talks with

South Korea in "late April", led to a sharp sell-off in Gilts, Bund and US

Treasuries, before turning around shortly before 1300GMT.

- 5-yr and 30-yr breakevens are 1.1bp wider while swap spreads are mixed with

2-yr 2.6bp wider and 5-30-yr 1.5bp tighter.