Gilts are trading lower with the.......>

GILT SUMMARY: Gilts are trading lower with the 10-yr part of the curve

underperforming conflicting reports on the progress of Brexit negotiations and

mixed UK data.

- 2yr gilt yield is +1.5bp at 0.485%, 5-yr +3.7bp at 0.766%, 10-yr +4.0bp at

1.304% and 30-yr +3.6bp at 1.867% according to Tradeweb.

- Majority of the action came in the first 20 minutes or so with Dec Gilt future

then trading in a tight 19 tick range for the remainder of the morning session

- UK industrial production surprised to the upside, rising 0.7% m/m helped by

aircraft production, however the sharp fall in construction output, -1.6% m/m,

means overall there will be no major revisions to Q3 GDP. While although the

trade deficit narrowed in September, over the course of Q3 net trade is still

looking to have acted as a drag on the economy.

- With another rise in oil price today and rising tension in the middle-east,

real yields have rallied widening breakeven rates further, led by a 3bp rise in 

the 30-yr to 3.472%. Swap spreads meanwhile are little changed.

- Markets now await comments from Davis and Barnier