Gilts have drifted lower in light......>

GILT SUMMARY: Gilts have drifted lower in light illiquid trade, weighed by heavy

selling in German 5-year futures, but overall markets are seen side-lined ahead

of key comments from Fed Chair Yellen at Jackson Hole.

- 10-yr Gilts are leading the way lower with yield 1.3bp higher at 1.07% while

both 3-yr and 30-yr Gilts are 0.9bp higher, according to Tradeweb.

- Gilts opened little changed with little direction seen overnight in Asia to

direct markets which had one eye on the opening of Jackson Hole Symposium.

However slipped lower in light volume as 2 of 3 German IFO numbers ticked higher

and then large selling in Bobl and Bund futures saw Gilts hit low.

- Latest Citi/YouGov inflation expectations were released showing a tick higher

in both year-ahead (2.6% vs 2.5%) and 5-10-year ahead CPI (3.2% vs 3.1%),

however, this had very little impact on the Gilts curve.

- Sterling has rallied against both the US Dollar and the Euro so far this

morning, while the UK's FTSE 100 index has squeezed higher by around 0.35%.

- UK breakevens are not doing too much either with spreads around 0.5bp wider,

while there has been little movement in swap spreads.