Gilts look set to close modestly.......>

GILT SUMMARY: Gilts look set to close modestly higher, but just off session

highs as US Fed Chair Powell testimony offsets some of the renewed Brexit

concern gains. 10-yr sector continues to outperform the rest of the curve with

2s/10s 2.2bp tighter and 10s/30s 0.2bp wider.

- 2-yr Gilt yield is -0.6bp at 0.754%, 5-yr -2.2bp at 1.023%, 10-yr -3.1bp at

1.262%, 30-yr -2.5bp at 1.721% & 50-yr -1.9bp at 1.578% according to Tradeweb.

- Gilts opened on the front foot after close vote on Customs Bill last night,

pared gains in initial reaction to in-line UK Labour data, but regained lost

ground as there was no sign of wage pressure increasing and overall data pointed

to gradual rise in rates.

- Gilt future extended gains in the afternoon, supported by newswire headlines

that Labour is prepared to vote in favour of a pro-EU Tory amendment to the

customs Bill which could see the government being defeated, rising political

uncertainty. An upbeat testimony from Fed Powell then weighed in last hour.

- Sstg strip is steady to 4 ticks higher, curve flatter as blue contracts

outperform reds/greens. Data continues tomorrow with release of June CPI