Gilts are opening on the soft side.....>

GILT SUMMARY: Gilts are opening on the soft side this morning with the yield

curve marginally steeper as the ultra long-end underperforms, taking cue from

unwind of some of the large flattening move in US Treasuries overnight. Markets

are very thin though and likely to be volatile as they wind down ahead of

Christmas holidays. 10-yr Gilt yield is 0.8bp higher at 1.156% while 2s/30s is

0.4bp steeper.

- The wrangling between the UK and EU over the type of trade deal the UK will be

able to agree continues with PM May saying that a bespoke deal is possible and

reports that Brexit Secretary Davis has said that the UK plan to treat goods and

services as inseparable during trade negotiations. However, EU Chief negotiator

Barnier has warned in The Guardian that Britain cannot have a special deal for

the City of London.

- There is a dearth of UK data released today, so attention likely on German IFO

at 0900GMT and US housing starts at 1330GMT. Progress of US Tax bill which is

expected to be voted on Wednesday will also be eyed.