Gilts are modestly lower, yield........>

GILT SUMMARY: Gilts are modestly lower, yield curve steeper, having pared back

some of their risk-on move seen Tuesday as the geo-political tensions over North

Korea's missile test eases for now. While Euro/Sterling has slipped comfortably

back below 0.9245, but is relatively steady vs the US Dollar.

- 2-yr Gilt yield is +1.7bp at 0.178%, 5-yr 1.6bp at 0.437%, 10-yr +2.4bp at

1.02% and 30-yr +2.9bp at 1.69% according to Tradeweb.

- Gilts opened sharply lower seen weighed by fall in rhetoric over latest

missile test by N.Korea and fade in risk-on sentiment. While easing in UK high

street deflation in August, with non-food deflation at its shallowest since

April 2013, also seen weighing on Gilts.

- There was no reaction to BoE lending data that showed a higher than expected

increase in mortgage approvals but a slow downed in unsecured credit in July.

- However Gilts squeezed to fresh session high of 127.51, as newswires reported

UK PM May reiterating that "no Brexit deal is better than a bad deal - UK swap

spreads are marginally tighter with the exception of the 15-yr which is 3.5bp

tighter, while UK breakevens are around 0.7bp wider across the board.