Gilts have traded in a wide range......>

GILT SUMMARY: Gilts have traded in a wide range Wednesday, ultimately continuing

the decline which began at the beginning of the month as global yields rose and

Brexit headlines dominated once again.

- Gilts and rates sold off following higher-than-expected Aug CPI data this

morning, though rebounded sharply following a Times report around 1200BST that

the UK would reject EU negotiator Barnier's Irish backstop proposal.

- The bears have won out though, with Dec 18 Gilt future down 43 ticks at

120.71, having traded in a range of 120.60-121.13.

- The curve has bear steepened, with the 2-Yr yield up 2.5bps at 0.845%, 5-Yr up

3.9bps at 1.189%, 10-Yr up 3.9bps at 1.607%, and 30-Yr up 4.1bps at 1.955%.

- Short Sterling has sold off sharply due to largely to the CPI data - the next

BoE rate hike is now priced in for Jun-19, compared with Aug-19 pre-CPI.

- Focus turns to Salzburg this evening, with UK PM May set to meet EU

counterparts ahead of Thursday's EU summit to discuss final Brexit arrangements.

- Issuance up Thursday, with DMO re-opening 1.625% Oct-28 Gilt for Stg2.75bln.

- Data highlight Thursday is UK Aug retail sales at 0930BST.