Gilts are languishing near session.....>

GILT SUMMARY: Gilts are languishing near session lows, curve bear steepening,

reacting to better than expected UK labour market data after starting slightly

weaker on mild risk-on sentiment.

- 2-yr Gilt yield is +2.3bp at 0.249%, 5-yr +3.4bp at 0.524%, 10-yr +3.7bp at

1.122% and 30-yr +4.1bp at 1.784% according to Tradeweb.

- Gilts opened Wednesday modestly lower seen weighed by a mild risk-on tone as

equities opened in positive territory and European periphery bonds ticked

higher, despite the lack of real direction seen overnight in Asia.

- Gilts did temporarily recover, taking cue from spike in German Bunds following

a Reuters ECB sources story that President Mario Draghi will not convey a new

policy message at Jackson Hole.

- However, UK unemployment dropping to 4.4% in June from 4.5% in May and a

surprise rise in total weekly earnings to 2.1% from 1.8% saw Gilts drop sharply

and eventfully hit fresh session lows. Real earning though remained negative.

- Swap spreads are tighter with the exception of the 10-yr which is marginally

wider. While UK breakevens are around 1bp higher across the board.