Long-end Gilts have gradually pared....>

GILT SUMMARY: Long-end Gilts have gradually pared losses in afternoon trade,

while the short-end has extended modestly gains and therefore curve has

maintained is steepening bias. 2s/30s look set to close 3.2bp wider at 134.1bps.

- The recovery came despite slightly higher than expected US PPI data as Empire

mfg and US industrial production disappointed. London and European market also

found support following wave of bond supply this morning. 

- 2-yr Gilt yield is -2.3bp at 0.691%, 5-yr -1.5bp at 1.106%, 10-yr -0.1bp at

1.639%, 30-yr +1bp at 2.034% and 50-yr +0.4bp at 1.819%. 

- Gilts fell to session low in reaction to large tail seen at 40-yr Gilt

re-opening auction, 10-yr yield hit 1.692% and highest level since Jan 4, 2016,

but quickly faded the move as markets looked ahead to opening of NY session. 

- There was a dearth of UK data or comments from official speakers today, so

attention likely to remain on the US before turning to release of UK January

retail sales and PM May's visit to Berlin tomorrow.

- UK breakevens are modestly wider, curve steeper while swap spreads are mixed

with 2-yr 3.6bp wider and 15-yr 1bp tighter.