The UK Debt Management.........>

GILT AUCTION PREVIEW: The UK Debt Management Office taps the 1.75% Sep-37 Gilt

for Stg2.25bln on Tuesday.

- BACKGROUND: The Gilt curve has progressively flattened since the beginning of

2017. This has been driven in large part by a re-pricing of monetary policy

expectations, which has pushed up the front end. While 10-year yields have held

within a 1.5-1.6% range over the past 18 months, 2-year yields have risen to

0.734% from a 2017 low of 0.038%.

- RV/HISTOY: The 1.75% Sep-37 is the benchmark 10-year gilt and is currently

trading at 1.768%, near the lower end of the YTD range and 9.7bps outside the

comparable swap. The 5s20s spread has narrowed since the beginning of the year,

trading down to 73bps from  102bps. Market-based inflation expectations have not

moved significantly this year. The 10-year breakeven has held within a 3.0-3.20%

range, while the 5Y5Y inflation swap forward has oscillated between 3.3-3.55%.

- TIMING: Results are due shortly after the auction closes at 0935GMT