Gilts suffered on Monday as it.........>

GILT SUMMARY: Gilts suffered on Monday as it appeared that the threat from North

Korea has lessened and that a diplomatic solution was being more aggressively

south. Gilts saw more weakness a China confirmed that it would implement an

import ban on North Korean coal etc. 

- However, there is a National holiday on both sides of the Korean border

tomorrow and so Gilts and other developed debt markets saw a small risk-off move

toward the end of European trading.

- The 10Y Gilt yield rose 1.9bp on Monday to 1.081% and was the weakest part of

the nominal curve but the real yield continued to act with an above parity yield

beta, jumping by 3.4bp on the day. However, the market had performed strongly

since the start of the month.

- The DMO announced it would hold one index-linked Gilt syndication in Oct-Dec.