Gilts are trading lower having been....>

GILT SUMMARY: Gilts are trading lower having been under pressure from the

get-go, with the 10-yr underperforming both US and German equivalent, seen

weighed by 10-yr Gilt re-opening auction and risk-on sentiment, and for now,

brushing off any Brexit concerns. Yield curve is pivoting around the 10-yr

sector with 2s/10s 2.2bp steeper and 10s/30s 0.8bp steeper.

- 2-yr Gilt yield is +0.7bp at 0.713%, 5-yr +1.4bp at 1.016%, 10-yr +2.7bp at

1.283%, 30-yr +1.8bp at 1.742% & 50-yr +1.8bp at 1.588% according to tradeweb.

- BoE Saunders appeared on CNBC and continued with his view that spare capacity

in the UK has been used up, poor Q1 data temporary, Q2 on track to rebound. Also

added that he thought rates would need to rise quicker than currently priced.

- There was no reaction to better than expected UK construction PMI and Sep Gilt

futures struggled to bounce off session lows even after decent 10-yr Gilt

re-opening auction.

- Sterling futures are 1 to 2 ticks lower, yield curve seen shifting higher as

markets await UK service PMI tomorrow and comments from BoE Governor Mark Carney

on Thursday.