Gilts have underperformed Treasuries...>

GILT SUMMARY: Gilts have underperformed Treasuries and Bunds despite sterling

being the best performing G10 currency of the day.

- Voting is currently underway in the third round of the Tory leadership contest

with results expected around 18:00BST. The final two rounds of MP voting will be

held tomorrow with the final three announced at 13:00BST before the final two

are announced around 18:00BST.

- The MPC rate decision and Minutes are also released tomorrow at midday BST

with analysts looking for a unanimous 9-0 vote to keep rates on hold, although

there is some chance of either Broadbent, Haldane or Saunders surprising by

voting for a 25bp hike. With the prospect of a no deal Brexit still a

possibility, there is a fairly high bar for the market to price in a

significantly more hawkish path (see our preview).

- 2y yields up 4.2bp today at 0.610%

- 5y yields up 5.0bp today at 0.639%

- 10y yields up 5.5bp today at 0.860%

- 30y yields up 3.0bp today at 1.452%