The Gilt market opened lower after a...>

GILT SUMMARY: The Gilt market opened lower after a weekend in which fears of an

escalation in the North Korean issue proved false. Indeed, hopes of a diplomatic

solution appeared to rise slightly as the head of the US military stressed the

need for a diplomatic solution.

- The 10-Year Gilt suffered more when it was announced that China would ban the

import of coal and other materials from North Korea. Currently, the 10-Year

yield sits 2.5bp higher at 1.087%.

- The 2-10Y Gilt curve steepened in the bear market movement while the 10-30Y

section flattened. The flattening of the 10-30Y spread in Gilts was not mirrored

along the swap curve but 

- The index-linked market suffered hard on Monday morning and the 10Y real yield

rose by 3.5bp to -1.91%. However, the move should be put into a context of a

13bp decline in yield last week.