Foreign Secretary Jeremy Hunt..........>

GILT SUMMARY: Foreign Secretary Jeremy Hunt indicated that the government is

focusing on the definition of the word "temporary" with respect to the Irish

backstop. Further assurances from the EU on this matter could tilt the balance

in favour of MPs supporting PM May's withdrawal deal.

- While the shorter-end of the gilt curve is trading sideways following the

initial rally at the open, yields continue to push lower at the longer-end and

are now within touching distance of 2017 levels.

- Yields are broadly 4-6bps lower across the curve. Current yields: 2-year

0.691%, 10-year 1.195%, 30-year 1.765%.

- The curve has flattened since the open with 2s10s trading down to 49.2bpps

from 54.8bps and the 2s30s spread narrowing to 106.3bps from 108.8bps.

- The short sterling futures strip has flattened with whites up 1.5-5.5 ticks

and greens/blues up 7.5-8.0 ticks.

- The Manufacturing PMI for December surprised higher (54.2 vs 52.5 survey), but

only on the back of heavy stockpiling ahead of Brexit.