UK Gilts and Italian BTPs are the......>

BOND SUMMARY: UK Gilts and Italian BTPs are the big movers thus far on

Wednesday, while the market continues to trade on fairly light volumes.

- Gilts caught a bid after June CPI came in far below expectations (2.4% Y/Y vs

2.6% consensus), with core Y/Y falling to lowest since Mar-17. The Sep8 Gilt

future jumped 48 ticks to 123.85, last trading at 123.66.

- MNI PINCH sees chances of a BoE rate hike in August slipping to 75% from 83%.

- Rate futures flat elsewhere, Euribor and Eurodollar Greens up 0.5-1.0 ticks.

- Italian BTPs are under pressure after Tuesday's rally, after LCH announced

higher margins on BTPs. The short-end is especially weak, 2-Yr yields rising

0.4bps at 0.587%, spread to Bunds out 4.5bps to 121.8bps.

- Bunds rose early as BTPs fell, with the Sep8 future up as much as 20 ticks on

the day at 163.05, and last trading at 162.94. 30-year auction coming up.

- US Tsy yields are off their highs, as Fed Chair Powell's second day of

Congressional Q&A awaits. 10-Yrs 0.2bps lower at 2.858%, down from 2.619% high.

Curve steepening slightly after 2s10s hit a new cycle low below 24bps Tuesday.

- JGBs have traded in a tight range, Sep8 future last unchanged at 150.87.