Gilts are tracking Tsy more closely....>

GILT SUMMARY: Gilts are tracking Tsy more closely than Bunds with yield curve

pivoting around the 10-yr sector as markets grapple with rise in US/China trade

rhetoric and continued domestic political risks.

- 2-yr Gilt yield is -1.1bp at 0.746%, 5-yr -1.4bp at 1.049%, 10-yr -1.5bp at

1.295%, 30-yr -0.6bp at 1.765% & 50-yr -0.6bp at 1.595% according to tradeweb.

- Concerns of an escalation in US/China trade war is the main impetus for the

market sentiment, while a China RRR cut and a growing number of foreign

companies operating in the UK warning about the slow progress of Brexit also

underpinning risk-off sentiment.

- Gilts are also off best levels though weighed by upside surprise to German IFO

expectation sentiment. With little further data expected today, however, markets

attention remains on global trade and vote in House of Commons on Heathrow

expansion that could be another test for the government

- Short sterling strip has ticked higher led by 2 to 3 ticks rise in red and

green contracts. Both breakevens are swap spreads are little changed.