###POV: 10-year Gilt future implied....>

GILT SUMMARY: ###POV: 10-year Gilt future implied volatility remains very low at

4.76% and compares to recent rise in 30-day historical vol and rise in Bund vol.

With a number of key events coming up in the next few days/weeks, there is

potential for implied volatility to rise. With latest MNI Pi showing a very long

position in Gilts, this could also be an indication of increase vol to come.

- There are conflicting scenarios in the Gilt market with markets concerned

about higher inflation and the possibility of higher interest rates coupled with

potential for rise in Gilt supply over the next 5-years as poor productivity

weighs on future growth, all seen putting downward pressure on Gilts.

- On the other side however, you have UK political and Brexit uncertainty with

the crucial European Union (withdrawal) Bill at committee stage in the House of

commons this week seen putting added pressure on an already weak government. Add

into the mix Dec EU summit seen key for UK to move onto the next phase of Brexit

talks, could all support bid in Gilts.

- How these events pan out over the next few months is seen crucial to how UK

growth/CPI/future path of interest rate will be impacted for 2018 and 2019.