###POV: WIDENING IN UK 5s/30s SPREAD LOOKS....>

GILTS: ###POV: WIDENING IN UK 5s/30s SPREAD LOOKS OVERDONE, UNDEPRFORMS US:

- UK 5s/30s spread has rallied from multi-year low of 51.42bps seen on Mar 22 to

now trade at 72bps while during the same period the US 5s/30s has flattened by

around 10bps

- Market pricing of the forward BoE rate path is little changed following

Governor Carney comments last week with only the pricing of the chance of a May

rate hike falling. Markets still see rates at around 1.10% in 2-yrs time with a

hike now in August of this year, followed by another in May 2019 and possibly a

3rd in May 2020.

- Pace of hikes is nowhere near that of the Fed, however, this should still keep

5-yr yields elevated with risk of improved economic data in months ahead, and

with a steady steam of demand for the long-end of the Gilt curve, yield on the

30-yr is unlikely to move substantially higher.

- With political pressure increasing on PM May to keep the UK in the customs

union and the October deadline fast approaching the long-end could see further

demand at the expense of the medium-term.