Gilts sold off in the afternoon,.......>

GILT SUMMARY: Gilts sold off in the afternoon, taking cue from sharp move lower

in US Treasuries as rise in Dollar/Yen and thin summer trade weighed on markets

triggering some stop-loss selling. 10-yr part of the yield curve has led the

sell-off leading to 2s/10s steepening by 1bp and 10s/30s flattening by 0.9bp.

- 2-yr Gilt yield is +1.9p at 0.756, 5-yr +2.1p at 1.013, 10-yr +2.6p at 1.259

30-yr +1.7p at 1.707 & 50-yr +0.5bp at 1.56% according to Tradeweb.

- Earlier Gilt futures opened lower following weak US Tsys and German Bunds,

however, recovered lost ground and edged higher as markets digested the war of

words between Iran and US, conclusions from the G20 summit, possibility of

changes to BoJ monetary policy and comments from new Foreign Secretary Jeremy

Hunt said that UK will not "blink in talks with EU".

- Sentiment turned in the afternoon though as NY traders got to their desks and

markets sold off in steady bursts in thin markets. Attention now turns to

comments from BoE Broadbent at 1800BST

- Short sterling futures are 0.5-3 ticks lower, strip steeper as blue contracts

come under most selling pressure, while 10-yr breakevens are 0.8bp wider.