Gilts have taken another large knock...>

GILT SUMMARY: Gilts have taken another large knock lower, this time following

rather hawkish comments from Bank of England MPC member Gertjan Vlieghe, a known

dove, spurring rate hike expectations for November.

- This time it is the 2-/10-year part of the yield curve that has come under the

most pressure and in-turn bear flattening the 10s/30s part of yield curve.

- 2-yr Gilt yield last +10.4bp at 0.471%, 5-yr +11.8bp at 0.761%, 10-yr +10.9bp

at 1.330% and 30-yr +7.2bp at 1.926%

- Gilts opened marginally lower as markets continued to digest the step-up in

BoE hawkish rhetoric Thursday, with some banks seen bringing forward calls for a

25bp rate hike at the next MPC meeting in November.

- Gilts then spiked lower in knee-jerk reaction to hawkish Vlieghe comments --

Right time for rate hike may be in coming months. Plus in Q&A said he sees

tightening moe than just reversing August cut.

- Real yields in the 5-/10-year area have taken an even heavier battering, with

5-yr and 10-yr beakevens 7bp and 6.5bp tighter at 2.985% and 3.04%respectively.

While 5-yr swap spreads are over 6bp tighter at 32.1bps.