Gilts are set to close modestly........>

GILT SUMMARY: Gilts are set to close modestly higher having reversed opening

losses, supported by soft UK mfg PMI, buying in USTs, ECB Praet comments on

APP/duration and delayed reaction to external events in Spain and Las Vegas.

Strong ISM mfg then weighed later on.

- 2-yr Gilt yield is -2.6bp at 0.43%, 5-yr -2.3bp at 0.764%, 10-yr -3.1bp at

1.331% and 30-yr -2.7bp at 1.891% according to Tradeweb. 

- Gilts opened lower led by the 10-yr part of the yield curve, taking cue from

overnight sell-off in USTs however gradually reversed losses as UK Sep mfg PMI

dropped more than expected, reports of buying in TYZ7 contract and delayed

reaction to Catalonia vote and mass shooting in Las Vegas.

- The Conservative Party conference has got off to a slow start in Manchester

with eyes on PM May's speech on Wednesday with talk of continued infighting.

- There have been some decent swap flows with a Stg103k DV01 5y/10y steepener

and a payer of the belly of a Stg103k DV01 5y/10y/30y fly.

- UK breakevens are little changed while swap spreads are mixed with 2-yr 3.5bp

wider, while 10-yr, 15-yr and 30-yr are around 1bp tighter