Gilts looks to settle steady to........>

GILT SUMMARY: Gilts looks to settle steady to higher following choppy session

with 10-yr near session lows as markets reacted to renewed political concerns in

Italy. Yield curve has reversed earlier flattening move and is now bull

steepening as short-end holds onto slight gains.

- 2-yr Gilt yield is -1.2bp at 0.824%, 5-yr -1.7bp at 1.185%, 10-yr -0.6bp at

1.508%, 30-yr -0.7bp at 1.908% and 50-yr -1.5bp at 1.693% according to Tradeweb.

- With little data from the UK, all eyes have been on Italian politics and

whether or not they have a debt cancellation plan in the coalition govt

programme or fight for member states to be able to leave monetary union. 

- Sep8 and Dec8 short sterling contracts have risen by 3 ticks today,

outperforming the rest of the strip, supported by earlier decent buying. Market

sources also added that there was buying of Dec call options, which look for the

BoE leaving rates on hold for the rest of the year

- BoE Broadbent made noises this morning about how the UK will still likely

generate inflation despite less output and income growth. While BoE agents'

summary flagged up softness in the UK consumer services.