Gilts are trading higher but well......>

GILT SUMMARY: Gilts are trading higher but well off session highs underpinned by

G7 spat over global trade, disappointing European data and domestic political

risk. Yiel curve is slightly flatter as short-end lags following BoE Ramsden

comments last night.

- 2-yr Gilt yield is -1.2bp at 0.739%, 5-yr -2.3bp at 1.084%, 10-yr -4.6bp at

1.364%, 30-yr -4.4bp at 1.829% & 50-yr -3.9bp at 1.659% according to Tradeweb.

- Elsewhere, newswire take on the Brexit showdown seen yesterday is that it was

a hallow victory for the Brexiteers inside the cabinet and that PM May is

forging a path that is likely to tie UK hands with the EU for a very long time.

- BoE/TNS inflation survey stilled showed the public expecting inflation to

flat-line for a couple of years at a level markedly above the Bank of England's

2% inflation target.

- Short sterling strip is trading steady to higher, curve flatter as green and

blue contracts rise by 3 to 5 ticks while white contracts remain steady.

- Markets now pricing a 63% chance of a 25bp rate hike in August following BoE

Ramsden comments yesterday that growth is set to exceed its speed limit.