Gilts ending Friday lower, with 5-yr...>

GILT SUMMARY: Gilts ending Friday lower, with 5-yr and 10-yr leading the

underperformance despite recovery attempts following lower than expected US

flash Q2 GDP, as higher German inflation weighs.

- 2-yr Gilt yield is +1.7bp at 0.256%, 5-yr +2.9bp at 0.579%, 10-yr +2.4bp at

1.223% and 3-yr +1.4bp at 1.864% according to Tradeweb.

- Gilts future actually opened a few ticks higher as GfK consumer confidence

dropped to match post-referendum low of -12 as consumers feel the pinch of

higher inflation and a deteriorating economic outlook.

- Futures then reversed gains and dropped lower, taking cue from sharp sell-off

in Bunds in wake of higher than expected German state CPI. Further selling then

noted before pan-German CPI was released, before light short covering seen.

- Gilts hovered around session lows before paring losses on back of 2.5% y/y

print in US flash Q2 GDP, the rally was short-lived though and prices fell back

towards session lows.

- Swap spreads are mixed, short-end marginally tighter, but little changed

overall. Breakevens are now marginally tighter after being 0.4-0.8bp wider