Despite yesterday's bruising...........>

GILT SUMMARY: Despite yesterday's bruising parliamentary defeat for PM Theresa

May, which has further reduced the government's clout in negotiations with

Brussels, an official spokeswoman this morning has stressed that May is still

seeking to reopen the Brexit deal and secure legally binding changes.

- Denting hopes for a Brexit extension to buy the government more time, Irish PM

Leo Varadkar has stated that while an extension is possible it is not

inevitable.

- Retail sales came in far stronger than expected for January (4.1% Y/Y vs 3.2

survey).

- Gilts have been stuck this morning, with choppy trading in a tight range.

Yields are close to unch on the day. Current yield levels: 2-year 0.727%,

10-year 1.152%, 30-year 1.673%.     

- The Mar-19 gilt future trades at 124.17 near the bottom of the day's range.

- Inflation breakevens are marginally lower with the 5-year benchmark trading

down to 3.137% from 3.146%.

- Short sterling futures are broadly flat/0.1 ticks lower.