Long-end gilts sold off sharply from...>

GILT SUMMARY: Long-end gilts sold off sharply from the get-go, but once EGB bond

supply was out the way, markets steadied and rebounded a little, but still

remain heavily under water and the yield curve has steepened with 2s/30s 6.2bp

wider at 137.1bps.

- 2-yr Gilt yield is -1.1bp at 0.703%, 5-yr +1.5bp at 1.137%, 10-yr +4bp at

1.68%, 30-yr +5.1bp at 2.075% and 50-yr +5bp at 1.865%.

- 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 were a couple of small bullish swap trades that went through earlier

with receiving in the belly of a 8Y-9Y-10Y fly and a 10Y-12Y-15Y fly.

- 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 trading modestly wider, curve steeper while swap spreads are

steady to 1-1.5bp tighter with the 15-yr sector outperforming.