Gilts are closing in on day's highs....>

GILT SUMMARY: Gilts are closing in on day's highs as Italy budget tensions

simmer.

- With Italy deputy PM Di Maio in late afternoon criticising the EU Commission

and saying Rome would go ahead with its budget plans despite 'threats', safe

haven assets including Gilts have picked up a bid.

- Dec 18 Gilt future is up 42 ticks at 121.34, having traded in a range of

121-121.43 today.

- The curve has seen some decent bull flattening: 2-Yr yield is down 3bps at

0.805%, 5-Yr is down 4.7bps at 1.133%, 10-Yr is down 4.9bps at 1.539%, and 30-Yr

is down 2.7bps at 1.906%.

- Boris Johnson`s comments criticising PM May`s Chequers deal on Brexit at the

Conservative conference this afternoon had little impact on Gilts/rates, with

Italian developments instead setting the tone.

- Short Sterling futures stronger across the strip, with contracts from

Jun20-Sep22 up 4-5 ticks.

- Wednesday sees CIPS/Markit Services/Composite PMI at 0930.