Gilts are trading higher led by the....>

GILT SUMMARY: Gilts are trading higher led by the 5-yr to 10-yr sector as UK

June inflation surprises to the downside and domestic political risk remains

elevated.

- 2-yr Gilt yield is -2.4bp at 0.729%, 5-yr -4.1bp at 0.982%, 10-yr -4.1bp at

1.22%, 30-yr -2.7bp at 1.693% & 50-yr -2.0bp at 1.561% according to Tradeweb.

- Sep Gilt future open a touch lower but quickly reversed losses and ticked

higher, supported by safe-haven bid following announcement from LCH on

increasing margin calls on BTPs.

- The future then rose over 45 ticks in knee-jerk reaction to UK CPI surprising

markets and remaining at 2.4% y/y in June vs expectations of rising to 2.6% y/y.

Falls in cost of clothing and footwear and computer games was seen offsetting

rise in fuel prices.

- 5-yr to 10-yr Gilts saw the largest moves higher, while sort-end gains were

modest as market still predicated the BoE would raise rates next month looking

through the soft CPI data as they saw CPI coming in at 2.5%. 

- Sstg strip has bull flattened as reds/greens and blue rise by 4-5 ticks