Gilts are trading under pressure.......>

GILT SUMMARY: Gilts are trading under pressure first thing Thursday, with

markets seen trading with a mild risk-on tone following US President trump

agreeing with the Democrats to a 3-month debt ceiling extension and newswire

reports that Trump told China's President Xi that military action on North Korea

is "not our first choice".

- However there is a Stg23.4bln (net of BoE & DMO holdings) redemption and

Stg4.77bln worth of coupon payment today which is seen supporting Gilts. 10-year

Gilt yield is 1.8bp higher at 1.025%.

- Attention is seen firmly on ECB GC monetary policy decision and press

conference this afternoon. While in the UK the second reading of the Brexit

Repeal Bill (or European Union Withdrawal Bill) is heard in the House of

commons.

- Most banks see ECB announcing a taper of its QE programme in October, so

attention likely to be on hints of this in the opening statement and any changes

to its staff forecasts on CPI and growth.

- Swap spreads are tighter across the board with 2-yr and 10-yr circa -2bp