- UK Gilts have rallied since early....>

GILT SUMMARY: - UK Gilts have rallied since early morning and the curve has

flattened on the back of the long end outperforming.

- The 2-year gilt trades at a yield of 0.805% down from 0.8297% while the

10-year yield has edged down 1.549% from 1.586%.

- The 2s10s spread has narrowed to 73.8bps down from 76.2bps while the 2s30s has

traded down to 108.4bps from 111.0bps.

- Inflation breakevens have ticked higher with the 5-year benchmark edging up to

3.200% from a low of 3.183%.

- Short sterling futures are down 1.0-4.0 ticks.

- Short sterling option flow has been reasonably light this morning. 

- The final estimate of the Q2 headline GDP came in a touch lower than expected

at 1.2% Y/Y vs 1.3% survey, while Business Investment dropped -0.2% Y/Y vs 0.8%

survey.