Gilts trading modestly higher..........>

GILT SUMMARY: Gilts trading modestly higher underpinned by risk-off tone in

European government bonds, renewed Brexit uncertainty and unrevised UK Q1 GDP

growth. Yield curve is slightly flatter as ultra long-end outperforms the 2-yr

sector.

- 2-yr gilt yield is -1.4bp at 0.731%, 5-yr -1.9bp at 1.079%, 10-yr -1.8bp at

1.375%, 30-yr -2.3bp at 1.81% & 50-yr -2.2bp at 1.618% according to Tradeweb.

- News on Brexit has not been encouraging with the latest round of talks

appearing not to have produced much and both UK and EU trading insults. While

Carney remarked that future path for policy will "depend on outlook for economy

which in turn will depend very much on how the Brexit negotiations evolve."

- There was a small brief rally in Gilts as UK Q1 GDP came in unrevised at +0.1%

q/q. Underlying info showed growth weighed by decline in household spending and

business investment and suggested the Q1 weakness was not solely attributed to

the adverse weather.

- White Sstg contracts are 1 to 3 ticks higher on the back of this uncertainty,

while breakevens are touch tighter but swap spreads little changed