Gilts trading sharply lower, led by....>

GILT SUMMARY: Gilts trading sharply lower, led by fall in the short-end and in

turn bear flattening the yield curve for a second day, as UK employment and wage

data were strong. 2-yr Gilt yield closing on key level of 0.944%. Markets also

leaning towards a more hawkish stance from the Fed later today.

- 2-yr Gilt yield is +6.5bp at 0.943%, 5-yr +6.5bp at 1.269%, 10-yr +5.2bp at

1.538%, 30-yr +4.5bp at 1.835% and 50-yr +4.5bp at 1.608% according to Tradeweb.

- Gilts were already trading modestly lower when they got slammed in wake of

better than expected UK labour data. 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 one by the end of 2018.

- Slightly higher public sector borrowing and fall in UK CBI industrial trends

was largely ignored by the markets. 

- Breakevens are higher led by 1.7bp widening in the 5-yr, while swap spreads

are little changed.