There was some 2-way flow seen in UK...>

GILT SUMMARY: There was some 2-way flow seen in UK Gilts in the afternoon, but

overall look set to close lower with the 10-yr part of the yield curve

continuing to underperform the rest of the curve after markets react to German

flash inflation, Fed Chair Powell Testimony and US data.

- Increasing Brexit concerns following comments from Michel Barnier and Nicola

Sturgeon however, reduce the sell-off in Gilts.

- 2-yr Gilt yield is +3.5bp at 0.837%, 5-yr +4bp at 1.215%, 10-yr +5.2bp at

1.561%, 30-yr +4.0bp at 1.949% and 50-yr +3.5bp at 1.726%.

- Softer than expected Pan-German flash Feb inflation supported a mild recovery

in Gilts, but initial reaction to Fed Chair Powell's comments led Gilts to hit

fresh lows. Warning from Barnier of time running out for agreeing a transitional

deal, rising domestic political pressure on PM May led Gilts to recover

temporarily. Further comments from Powell on strength of US economy and

confidence in rise in CPI, then weighed on Gilts into LDN close.

- Breakevens are little changed with the exception of 30-yr which is 1.7bp

wider, while swap spreads are steady apart from the 2-yr which is 4bp tighter.