This morning's weaker than expected....>

GILT SUMMARY: This morning's weaker than expected services PMI for June, and a

contractionary print for the composite series, has raised the probability of

negative growth during the second quarter.

- Speaking in Lisbon, the Bank of England's Jon Cunliffe has stated that recent

issues at funds with illiquid assets are not a financial stability risk.

- The Sep-19 gilt future trades at 132, up 43 ticks from Tuesday's close and 16

ticks off the day's low; L-H: 131.84-132.29.

- Gilts have given back some of the earlier gains following the PMI release.

Yields are 2-4bps lower on the day. Cash yields (Last / 1d chg / L..H): 2Y

(0.4905% / -2.3bp / 0.487%...0.4988%); 5Y (0.4909% / -3.1bp /

0.4875%...0.5011%); 10Y (0.6894% / -3.2bp / 0.6858%...0.7%); 30Y (1.3125% /

-4.1bp / 1.3091%...1.3257%).

- The curve has bull flattened: 2s10s (18.7bp / -0.8bp / 18.7bp..19.4bp); 2s30s

(81bp / -1.7bp / 81bp..83.2bp).

- The short sterling futures strip has flattened: W (+ 1.5/2.5 ticks); R (+ 2.0

tick); G (+ 2.0/3.0 ticks); B (+ 3.0/4.0 ticks)