Gilts are trading higher, yield........>

GILT SUMMARY: Gilts are trading higher, yield curve flatter as the long-end

outperforms following strong demand at 50-yr Gilt re-opening syndication and

risk-off sentiment on N.Korean geopolitical tensions.

- 2-yr Gilt yield is -1.1bp at 0.185%, 5-yr -2bp at 0.430%, 10-yr -3.7bp at

1.020% and 30-yr Gilt -4.4bp at 1.686%.

- Gilts opened on the soft side weighed by slight risk-on tone despite events in

North Korea, pick up in UK retail sales highlighted by BRC and rise in China

Caixin service PMI to 52.7 from 51.5.

- Gilts gradually pared losses as UK service PMI dropped slightly more than

expected and then underpinned by large demand at 50-yr Gilt re-opening

syndication (25bln, according to source) and upcoming BoE repurchases in the

over 15-yr category.

- In the afternoon Gilts supported by bid in US Tsy and Trump tweat about

selling high-tech arms to S.Korea and Japan. Low cover at +15yr BoE reverse

auction led to some selling, but further worries over the political situation in

N.Korea saw flight-to-quality bid.