Gilts are little changed from midday...>

GILT SUMMARY: Gilts are little changed from midday levels look set to close

modestly higher led by the rally in the 5-yr sector, with little seen to direct

markets in the afternoon. 2s/10s is 0.7bp flatter while 10s/30s is 1bp steeper.

- 2-yr Gilt yield is -0.9bp at 0.716%, 5-yr -1.4bp at 1.013%, 10-yr -1.2bp at

1.26%, 30-yr -0.2bp at 1.735% & 50-yr +0.2bp at 1.581% according to tradeweb. 

- Markets appear to be waiting for key event risks due later this week, although

UK service PMI on Wednesday is seen crucial for the possibility of rates being

hiked by the BoE in August.

- Earlier, markets took positives that manufacturing PMI did not slip further in

Q2, but Gilts recovered lost ground underpinned by continued global trade and

political (domestic and German) concerns.

- In the afternoon, each mini-rally in Gilts was quickly met with some selling

aided by better than expected US ISM mfg

- Sstg future contracts have held onto modest gains and are 1 to 3 ticks higher,

while 5-/10-yr breakevens circa 1.5bps wider