Nomura say this is a "time of unique..........>

GILTS: Nomura say this is a "time of unique political uncertainty in the UK" due

to a combination of short term (recent scandals), medium-term (government's weak

majority) and long-term (Brexit) factors, and recommend possible trades to hedge

against the political tail risks.

- Nomura do not recommend hedging with duration trades or cross market trades,

but see a better way of trading tail risk with a 5s/30s curve steepener which

has a "positive carry" and roll of around 18bp over a year.

- However, Nomura say that an asset swap trade (selling the cash vs receiving

swap in the 10-yr area) "makes the most sense" in hedging specific tail risk

more accurately. Nomura add that this trade should benefit from "either

non-resident selling of Gilts because of political concerns and/or fears of

increased issuance under a Labour-led government".