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

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

markets trade with a risk-off tone following rise in US/China trade spat. The

10-yr part of the yield curve continues to outperform the rest of the curve.

- 2-yr Gilt yield is -2.2bp at 0.697%, 5-yr -3.5bp at 1.013%, 10-yr -4.6bp at

1.275%, 30-yr -2.5bp at 1.755% & 50-yr -2.2bp at 1.571% according to Tradeweb.

- The government was defeated once again in the House of Lords on the question

of a 'meaningful vote' on the EU Withdrawal Bill and so it will now go back to

the House of Commons on Wednesday. PM May will then have to try and convince her

rebel MPs to not back the amendment which could be harder this time.

- 2-days of Brexit negotiations get underway today with the Irish border issue

and future relationship on the agenda. However there is also talk within the EU

that the risk of the UK crashing out of the EU with no deal in March 2019 is

increasing.

- Sstg is higher/flatter, breakevens touch tighter and swap spreads mixed

- With no UK/EU data domestic politics, global trade and the ECB forum in Sintra

have been the main drivers for markets today.