Gilts are trading sharply higher.......>

GILT SUMMARY: Gilts are trading sharply higher supported by safe-haven buying as

markets fret over renewed Italian political risk, US/China trade, US/N.Korea

summit delays and soft Eurozone and UK data. The 10-yr part of the curve has led

the move higher, pivoting the yield curve.

- 2-yr Gilt yield is -3.1bp at 0.804%, 5-yr -4.9bp at 1.152%, 10-yr -6.7bps at

1.454%, 30-yr -4.7bps at 1.879% and 50-yr -3.5bps at 1.678% according to

Tradeweb.

- Gilts opened higher tacking cue from rally in US Treasuries and German Bunds

on renewed concerns over US/China dispute and possible delay in US summit

meeting with N.Korea. Soft Eurozone flash PMI's and sharp fall in BTPs then

supported further risk-off buying, all before release of UK CPI data.

- The sharp move in Gilts meant there was little reaction to UK CPI surprising

to the downside (headline at 2.4% yy/y and core 2.1% y/y).

- Short sterling strip has flattened with blue contract 5 to 6 ticks higher,

while chance of a rate hike in Nov has fallen to 73%.

- Gilt rolls have picked up in last hour with around 65k blocked at 96.5