The Gilt market returned with a thud...>

GILT SUMMARY: The Gilt market returned with a thud from the long weekend in the

UK, tracking global bonds lower amid a strong risk-on move.

- Sep8 Gilt future is off 39 ticks at 122.94, following through from a 30-tick

drop at the open.

- The UK curve is steeper, again, tracking global yield movements. 2-Yr yields

are up 1.9bps at 0.741%, 5-Yrs up 2.8bps at 1.046%, and 10-Yrs up 2.7bps at

1.789%.

- The Short Sterling futures strip is also steeper. While the short-end remains

anchored, Red through Blue contracts are 2-3 ticks weaker.

- The key news of the day has been speculation over the future of BoE Governor

Mark Carney, with the government denying reports they are asking him to extend

his term one year to 2020.

- All else equal, Carney staying on another year should reduce uncertainty. Not

much reaction to the headlines seen today in Gilts however.

- Issuance is a key theme this week. DMO announced today it will tap 1.0% Apr-24

Gilt on Sep 6 for Stg3.0bln. Friday, DMO announces Oct-Dec issuance plans.