Gilts are trading modestly higher,.....>

GILT SUMMARY: Gilts are trading modestly higher, but off opening high levels, as

markets digest latest comments from geo-political leaders on North Korea.

Markets currently have a risk-on tone but this is fading as I write. 10-year

Gilt yield is 0.8bp lower at 1.011% having touched a low of 0.995%.

- UK parliament returned from summer recess on Tuesday with the main highlight

being David Davies' update on Brexit negotiations (or lack of) to the House of

Commons. Davies repeated that there was larges differences on the issue of

financial settlement and would not be held to ransom, but some "concrete

progress" had been made in other areas. While Labour said that it would vote

against the Brexit Repeal Bill.

- Looking ahead to today, little in the way of economic data from either the UK

or Eurozone, so attention likely on geopolitical tension in Asia and continued

debate on Brexit.

- The Bank of England continues its APF re-investment Wednesday with purchases

in the 7-/10-year category for Stg1.125bln.

- Swap spreads and breakevens are little changed so far today.