###POV: Are Gilts Likely to be supported by...>

GILTS: ###POV: Are Gilts Likely to be supported by DMO remit announcement?

- Analyst expectations for Gilt issuance for fiscal year 2018/19 that MNI have

seen show they expect it to fall in Stg103bln compared to Stg115.1bln issued for

FY 2017/18.

- And along with BoE carrying out its APF re-investment programme, would suggest

this should be supportive of Gilts in the short-term, however with the 10-yr

Gilt yield falling 20bps since hitting yearly high of 1.692% on Feb 15 and

compares to only a 6.5bp drop in the UST 10-yr over the same period then there

might be limited room for further outperformance.

- What is also interesting is that all analysts forecast the DMO to increase

duration and issue a larger proportion of long-dated Gilts where the DMO think

there will be extra demand. If this is the case, then this could put upward

pressure on yields on that part of the curve.

- What also needs to be taken into account is the prospect of rising interest

rates and the impact this will have on UK finances as highlighted in MNI David

Robinson's analyst piece: "Near Term Gain, But Rate Hike To Hit UK Finances"