Gilts are trading higher led by the....>

GILT SUMMARY: Gilts are trading higher led by the 5-yr and over sector of the

yield curve, supported by mild risk-off flows and decent 5-yr Gilt re-opening

auction. While Brexit concerns remaining in the background also underpin bid in

Gilts.

- 2-yr Gilt yield is -2.2bp at 0.756%, 5-yr -3.4bp at 1.121%, 10-yr -3.9bp at

1.462%, 30-yr -3.3bp at 1.861% and 50-yr -3bp at 1.636%.

- Gilts opened slightly higher but then squeezed higher underpinned by continued

Brexit concerns -- Davis says will not pay Brexit bill unless it backs down from

keeping N.Ireland in customs union. While it was announced that EU council

president Tusk is to meet PM Mat this lunchtime.

- A smaller than expected fall in UK manufacturing PMI and robust mortgage

lending data then temporarily weighed on Gilts, but buyers came back in and

pushed Gilts to intra-day high.

- There was some light relief as DMO sold Stg2.75bln in re-opening of 5-yr 0.75%

2023 Gilt with tail of only 0.2bp.

- Breakevens are circa 1bp tighter while swap spreads are ~1.5bp wider.