Brexit negotiations have now reached...>

GILT SUMMARY: Brexit negotiations have now reached the next key milestone. A

working agreement has been reached in principal at the technical level and PM

Theresa May must now get her cabinet onside. The key sticking point is still the

proposed Irish backstop measure and whether Brexiteers will back it.

- The market will be watching for any cabinet resignations. Top of the watch

list are Penny Mordaunt, Esther McVey and Andrea Leadsom. May's team is

supposedly prepared for several resignations and these MPs are the most likely

to go. A more damaging loss would be Brexit negotiator Dominic Raab, who took

over from David Davis (who had previously resigned over the direction of Brexit

negotiations). Conversely if Raab stays the course, that would be a relatively

bullish sign for May. 

- Gilts have been particularly volatile. The 10-year sold off in the early

morning before rallying hard and then giving back some gains over the past half

an hour. The 10-year trades at 1.482% off a morning low of 1.464%. The 2s10s has

narrowed to 70.7bps from a high of 73.8bps.

- The short sterling futures strip is 1.0-2.0 ticks higher.