Gilts look set to close steady to......>

GILT SUMMARY: Gilts look set to close steady to modestly higher as they digest

the BoE monetary policy announcement and reverse some of the earlier risk-off

move. UK 10-yr Gilt yield is -1.1bp at 1.38% vs low of 1.348%, while 2-yr is

-0.7bp at 0.795%, 30-yr -1bp at 1.806% and 50-yr -0.2bp at 1.652% according to

Tradeweb

Sep Gilt future squeezed higher into the BoE monetary policy decision and then

rallied to intra-day high following the announcement despite the initial hawkish

first take of interest rates rising to 0.75% from 0.50%. Even the front end of

the short sterling strip managed to reverse initial move lower to then tick

higher, as markets saw no reason to price in a quicker path on rate increases.

- The release of the MPC's first estimate of the 'neutral rate' did not live up

to its heightened expectation with BoE Carney saying that Brexit is a key factor

in where the R* goes and that there were a number of factors weighing on

short-term R* that made it lower than the longer term rate of between 2.0%-3.0%.

- Gilts faded the higher move though as US session got underway, weighed by

solid US data and as markets reversed some of the earlier risk-off move.