Gilts remain in negative territory,....>

GILT SUMMARY: Gilts remain in negative territory, weighed by earlier return to

risk-on tone in markets and better than expected UK retail sales. Range has been

tight and flows light though. 10-yr sector is seen pulling the rest of the yield

curve higher

- 2-yr Gilt yield is +0.9bp at 0.699%, 5-yr +1.2bp at 0.984%, 10-yr +1.8bp at

1.241%, 30-yr +1.2bp at 1.713% & 50-yr +1.3bp at 1.565% according to Tradeweb

- Sep Gilt opened lower, taking cue from fall in US Treasuries overnight on hope

of a start to resolution to US/China trade spat. The future was trading close to

intra-day high before falling sharply in knee-jerk reaction to better than

expected UK retail sales. Gilts recovered from lows though with markets seen

unwilling to push yields higher and instead looking for next directional move.

- Total retail sales jumped 0.7% in July, way above MNI median for a flat

reading, supported by the unseasonably warm weather and the World cup, as

non-food and non-store retailing expanded strongly.

- Short sterling futures are steady to 3 ticks lower, with strip slightly

steeper as blue contracts underperform whites and reds.