###5-year gilt yield looks to be stuck in a...>

GILTS: ###5-year gilt yield looks to be stuck in a new higher range since the

BoE's Sep 14 MPC meeting were it hinted that rates would need to rise in "coming

months" if data continues as expected, trading between 0.70% and 0.85%.

- Markets look reluctant to push the yield higher, either unconvinced the BoE

will not raise rates twice within 12-months as priced in the OIS markets (1 hike

this year and another in Aug 2018) or that they think it will be a policy

'error' and something the BoE will have to reverse as the UK leaves the EU in

the next 3 years, if a transition can be agreed.

- POV: With a strong Labour showing at last week party's conference and talk of

large state intervention and shift in policy to the left and the well known

differences in the Conservative party and questions over PM May's leadership,

the market does not appear to be taking into account the possibility of either a

leadership challenge or the chance of snap elections, that would likely bring in

a Labour government if you believe the polls. 

- If the disunity is laid bare at the Conservative conference this week (already

talk of leadership challenges and Boris Johnson) the political risks could rise.