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

GILT SUMMARY: Gilts are trading modestly higher, supported risk-off flows as

pressure mounts on PM May and her government as EU releases draft EU Brexit

withdrawal agreement and more Tory MPs backing amendment to keep UK in customs

union. Yield curve is ever so slightly flatter as ultra long-end outperforms.

- 2-yr Gilt yield is -3.3bp at 0.796%, 5-yr -3.7bp at 1.178%, 10-yr -4.2bp at

1.518%, 30-yr -3.9bp at 1.913%, 50-yr -4.5bp at 1.684%.

- The EC has released its draft EU Brexit withdrawal agreement and it does not

make for pretty reading for the Tory government. Newswires highlight that it

states the transitional deal ends on Dec 31, 2020, demands Northern Ireland to

remain in the Customs Union and for the UK to be bind by ECJ rules until the

2030s. Its reported that May is expected to reject the proposals though

- News that there are possibly 10 Tory rebel MPs backing an amendment to the

Trade Bill and keep the UK in a Customs Union with the EU is also adding to

pressure on PM May. May's speech on Friday becomes more important now.

- Uk breakevens are slightly tighter as sterling slips lower, while swap spreads

are steady to wider led by 2.6bp rise in the 2-yr.