Markets were relatively calm with......>

GILT SUMMARY: Markets were relatively calm with Gilts trading in lower range

until a couple of hours before London close saw them sharply reverse losses on

US debt ceiling concerns, only for mild sell-off to occur in wake of Fed Kaplan

comments on balance sheet reduction.

- 10-yr Gilt yield temporarily dropped below 1.05% level but quickly bounced

back and currently trades 0.9bp higher at 1.06%. Curve is slightly steeper with

2-yr & 5-yr yields little changed at 0.194% & 0.469% respectively.

- The pound has given up most of its gains versus the Euro and the US Dollar

during afternoon session, but the FTSE 100 index is set to close higher despite

profits warning from Dixons Carphone.

- Gilts opened lower hitting session low ahead of UK 2nd estimate of Q2 GDP

data. Q2 GDP came in unrevised at 0.3% q/q, however lower than expected consumer

spending and stagnation in business investment saw Gilts pare losses. While

reports of a 81k fall in UK net migration also underpin bid.

- Gilts then traded sideways during rest of morning and start of afternoon

session, before Trump comments on US debt ceiling brought market to life