Gilts rallied strongly about...........>

GILT SUMMARY: Gilts rallied strongly about half-an-hour after opening on the

back of rising tension between Spain and Catalonia governments and have pretty

much remained close to session highs ever since. The yield curve is flattening

as long-end outperforms.

- 2-yr Gilt yield is -2.9bp at 0.465%,5-yr -3.6bp at 0.803%, 10-yr -4.1bp at

1.36% and 30-yr -4.1bp at 1.918% according to Tradeweb.

- Gilts initially opened little changed as markets turned their attention to

next weeks BoE MPC meeting, were they are expected to raise rates for the first

time in over 10-years. Headlines coming out of Spain though quickly led to

flight-to-quality bid as first Catalonia said it was sending an urgent mission

to Madrid to plead for a deal, only for another headline to say that the

Catalonia parliament is being asked to vote on a independence declaration. The

vote is expected to be taken at 1315 local time newswires report.

- A Dec Gilt future block buy at 124.16 also supported bid in Gilts.

- Breakevens are trading 1.1bp to 1.9bp tighter, curve flattening, while swap

spreads are once again mixed with the ultra long-end around 1.1bp wider.