It was a session of 2-halves with......>

GILT SUMMARY: It was a session of 2-halves with morning gains pretty much given

up in the afternoon following release of UK draft Brexit transitional position

and initial negative reaction to comments from BoE Carney, Broadbent, Haldane &

Tenreyro at TSC hearing. Curve has flattened as long-end outperforms.

- 10-yr Gilt yield is 3.5bp lower at 1.551%, while 2s/10s is 2.7bp flatter and

5s/30s 1.1bp flatter.

- Gilts got a boost in the morning from soft French/German flash PMI data and

then from surprise rise in UK unemployment rate to 4.4% from 4.3% and larger

than expected surplus in January public finances.

- Bloomberg scoop on UK's draft brexit transitional position, then increasingly

weighed on Gilts as it appeared the UK was looking for a longer transition

period than the muted 21-months, ie to lesson the pain on the UK.

- Comments from BoE Tenreyro that rise in rates are likely to be stronger than

seen in Nov and Carney adding that further stimulus withdrawal will be need in

the next couple of years led Gilts to reverse morning gains.

- Gilts bounced off lows in last hour of trade as sell-off looked overdone