Gilts look set to end Wednesday........>

GILT SUMMARY: Gilts look set to end Wednesday marginally lower, but close to

session highs as they recover from lows on back of light consistent buying

underpinned by dovish comments from Fed Bullard.

- 2-yr Gilt yield is +1.4bp at 0.273%, 5-yr +2.0bp at 0.599%, 10-yr +2.1bp at

1.229% and 30-yr +2.3bp at 1.856% according to Tradeweb.

- Gilts opened much weaker as NISER called for the BoE to raise rates in the Q1

of 2018 and to open up a debate on policy normalisation, and expects growth to

pick up in the second half of 2017.

- Gilts faded the move lower as future hit 1st resistance at 124.74 (21-DMA) and

in wake of weak July construction PMI. This produced more sellers though and

Gilt future eventually hit low of 125.67 with yield on 10-yr Gilt at 1.26%.

- This seemed to flush out the last of the sellers and buyers gradually returned

to the markets and pushed Gilts higher. Gilts continued to pare losses as

Bullard said he would not support another rate hike. Light selling then seen

towards session close as Fed Mester says further rate hike need despite weak CPI

- Swap spreads and breakevens are mixed but little changed,