Gilts squeezed higher in the...........>

GILT SUMMARY: Gilts squeezed higher in the afternoon, taking cue from rally in

German Bunds on back of soft German HICP and in-line US PCE core data, but have

since faded slightly. Curve has faded some of its earlier bull steepening move

with 2s/10s now at 64.5bps vs high of 65.8bps and 10s/30s at 41bps vs 41.8bp.

10-yr Gilt yield last 2.4bp lower at 1.428%

- More bank analysts have adjusted their call on BoE interest rates with HSBC

now expecting no hikes for either 2018 or 2019. While Nomura who originally

forecast two hikes this year (May & Nov) now expect this to be delayed by 1

quarter and see a hike in August and then February.

- Elsewhere PM May has appointed Sajid Javid to replace Amber Rudd at the Home

Office following the later's resignation late Sunday. Some picking up that Javid

supports Brexit having initially campaigned to remain in the EU.

- Front end of Short Sterling strip has edged higher by 1 tick, while green

blues remain steady.

- Swaps spreads are in the region of 1.5bp wider, while breakevens are steady to

higher with 5-yr 1bp up at 2.939%.