Gilts are trading lower, yield curve...>

GILT SUMMARY: Gilts are trading lower, yield curve steepening after suffering a

sell-off just before 30-yr Gilt re-opening auction and then crashed lower in

reaction to sharp rise in the tail.

- 2-yr Gilt yield spread is +2.1bp 0.518%, 5-yr +2.4bp at 0.763%, 10-yr +3.0bp

at 1.260% and 30-yr +3.2bp at 1.83% according to Tradeweb.

- Gilts initially opened little changed to lower with no real progress seen in

the Brexit negotiations with chatter that they could be extended to eve of

Summit

- Gilts then sold off just before 1000GMT and sterling spiked higher, likely on

the back of a BBC News story that UK ministers were 'absolutely optimistic' of a

Brexit border deal. Later on though a Gilt future block of 5,539 contracts was

put through which could of explained the move lower.

- Then a sharp rise in the tail at the 30-yr Gilt re-opening auction led to Gilt

futures spiking lower by another 21 ticks.

- Breakevens are 1.5bp wider as sterling falls back after initial spike higher,

while swap spreads are little changed except for 2-yr which is 2.9bp tighter.