Gilts have petty much traded...........>

GILT SUMMARY: Gilts have petty much traded sideways in London afternoon session,

having fallen heavily at the start, with markets attention now seen turning to

Fed FOMC monetary policy decision on Wednesday and then ECB and BoE on Thursday.

The 10-yr part of the yield curve has led the underperformance.

- 2-yr Gilt yield is +0.6bp at 0.469%, 5-yr +1.6bp at 0.728%, 10-yr +2.1bp at

1.224% and 30-yr +1.3bp at 1.799% according to Tradeweb.

- Once again majority of the days action happened within the first few hours of

trading with markets reacting surprise tick higher in UK inflation and reduction

in UK political uncertainty.

- There is more confidence that Theresa May will remain as PM in the near-future

following positive reception to the Brexit breakthrough. While a YouGov poll

showed Conservatives ahead of Labour for the first time since the elections.

- Attention is now on Fed FOMC meeting and updated dot-plot curve and how many

rate hikes they see in 2018.

- 10Y & 30Y breakevens are 1bp & 1.5bp wider respectively as Gas prices spike

following explosion in Austria, while swap spreads are mixed but little changed.