Gilts look set to close sharply........>

GILT SUMMARY: Gilts look set to close sharply higher, yield curve flatter, after

late risk-off surge, as US retail sales come in on the soft side, Atlanta Fed

GDP est drops to 1.9% and rise in UK/Russia Tensions.

- 2-yr Gilt yield is -3.8bp at 0.80%, 5-yr -4.6bp at 1.122%, 10-yr -5.6bp at

1.431%, 30-yr -6.5bp at 1.821% & 50-yr -6.8bp at 1.612%.

- With a lack of direction seen from the UK in the morning it was events in

Europe that influenced the Gilt market. Having managed to squeeze higher at the

start of trading, Gilts pared gains, taking cue from fall in German Bunds

following comments from ECB President Draghi and a disappointing 30-yr Bund

auction.

- Gilts recovered in the afternoon though as PM May ordered 23 Russian diplomats

to leave the UK within a week following the spy poison case and a number of over

measures against Russia. Russian the responded by saying that they would act as

well. Soft US retail sales also aided rally in Gilts.

- Gilts then saw late surge as equites reversed gains and evidence of a slowing

US economy.