Gilts are trading slightly higher......>

GILT SUMMARY: Gilts are trading slightly higher having reversed opening losses

in wake of softer than expected UK manufacturing PMI and block buy in US

Treasury futures. Curve is bull steepening as front-end out performs.

- 2-yr Gilt yield is -1.5bp at 0.441%, 5-yr -0.7bp at 0.779%, 10-yr -0.7bp at

1.355% and 30-yr -1bp at 1.908% according to Tradeweb.

- Gilts opened lower led by the 10-yr part of the yield curve, taking cue from

overnight sell-off in USTs as markets react to comments from Fed's Harker that

he's "pencilled in" a rate hike in Dec and base case is for 3 more next year.

- Gilts reversed losses though as UK Sep mfg PMI dropped more than expected to

55.9 from downwardly revised 56.7 in Aug, and 7.35k block buy in TYZ7 contract.

- In the UK key events will be the Conservative Party conference in Manchester

and PMI's over the next few days. Chancellor Hammond has already been on the

wires ahead of his party conference speech saying that the underlying health of

the economy is strong, but working through difficult period.

- UK breakevens are little changed while swap spreads are mixed with 2-yr 2.3bp

wider, while 10-yr, 15-yr and 30-yr are around 1bp tighter.