Gilts traded inside a fairly...........>

GILT SUMMARY: Gilts traded inside a fairly contained range on Wednesday. On the

low side, the range was approximately bounded by the low from yesterday at

around 121.60, which increases the technical support should this level be tested

again.

- Trading remains technical and sentiment-driven, rather than fundamentally

motivated. 

- Going into the close, the 10Y Gilt yield is 1.3bp higher at 1.536% mostly

pushed higher by a 1.5% rally in the FTSE and generally perky global equity

markets. However, Gilts smartly outperformed the Bund market, dragging back some

of the underperformance of the past 3 weeks. 

- Much of a rise in nominal yields was explained by the increase in breakeven

inflation and the 30Y BEI was +3.1bp. 

- Halifax released January HPI at a weaker-than-expected at 3.2% 3mY/Y.

- Thursday is the MPC meeting and inflation report. Contacts expect a 9-0 vote

for no change tomorrow, although some see a rate hike as early as May.