The list of candidates to become the...>

GILT SUMMARY: The list of candidates to become the next Conservative party

leader and prime minister has been reduced to three, although in reality this is

a sideshow for the main event: Boris Johnson's coronation. Regardless of whether

Michael Gove or Jeremy Hunt makes it to the final two, the Conservative party

base will vote for the candidate that is unequivocal about the UK leaving the EU

by October 31: Boris. A recent poll showed that 83% of party members believe it

would be acceptable for a Leave-voting PM to pursue a no-deal Brexit.

- Political instability in the UK, rising geopolitical risks and a dovish shift

among developed market central banks are keeping gilts supported.

- The Sep-19 gilt future trades at 130.59, 26 ticks off the day's high; L-H:

130.3-130.85. Gilts have rallied during the session with yields 3-5bps lower on

the day. Cash yields (Last / 1d chg / L..H): 2Y (0.5795% / -3.2bp /

0.5703%...0.5856%); 5Y (0.602% / -4.2bp / 0.5928%...0.6091%); 10Y (0.8149% /

-4.9bp / 0.8044%...0.823%); 30Y (1.4245% / -3.3bp / 1.4171%...1.4327%).

- Short sterling futures have broadly rallied with reds & blues outperforming: W

(+ 2.5/6.0 ticks); R (+ 5.0/6.0 ticks); G (+ 5.0/5.5 ticks); B (+ 5.5 tick).