Gilts look set to close mixed with.....>

GILT SUMMARY: Gilts look set to close mixed with the long-end having reversed

earlier BoE induced losses on back of return to risk-off flows as Italy

political concerns rise once again, while the short end remains weighed by

prospect of near-term BoE rate hikes.

- 2-yr Gilt yield is +2.4bp at 0.732%, 5-yr +1.2bp at 1.037%, 10-yr -0.4bp at

1.286%, 30-yr -1.3bp at 1.755% & 50-yr -1.3bp at 1.582% according to Tradeweb.

- Gilts sold off sharply, especially the short-end in reaction to a third MPC

member voting for a rate hike at todays BoE meeting and the central bank

announcing that it would look to wind down QE once rates are in the region of

1.50%, down from 2.0% previously.

- Money markets started to price in higher odds of the next BoE rate hike coming

in August as majority of MPC said they wanted to see more evidence that growth

was rebounding in Q2 before hiking rates again.

- Long/ultra long-end of the curve recovered lost ground during London afternoon

session and even edged higher though following return of Italy political risk.

- Tonight markets eye BoE Governor Carney's Mansion House speech.