The Gilt contract opened firmly but quickly...>

GILTS: The Gilt contract opened firmly but quickly ran into some selling.

However, the swoon lower was arrested fairly rapidly and the contract is pushing

the day's high at 121.20. first resistance is the high from yesterday at 121.30.

- The entire Gilt curve is around 2.5-3.0bp lower relative to the close from

yesterday and the 10Y yield is at 1.587%. The 7-10Y section of the curve is just

about leading the rest of yield curve lower today.

- Sterling has softened in the past hour, slipping to 1.388 against the

greenback from 1.390 prevalent in Asian trading.

- Most of the decline in Gilt yields is being seen in the real yield component

of the nominal yield. Following the upside surprise in CPI yesterday, the

breakevens are fairly static. 

- There is no Gilt supply today but the DMO does sell Stg2.25bln of the Gilt

1.75% 2037 in a very busy EGB supply day tomorrow.