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

GILT SUMMARY: Gilts are trading modestly higher into NY open, underpinned by the

overnight rise in trade tensions between US and China, but move higher seen

weighed by 2041 Il Gilt syndication and supportive comments from German

Chancellor Merkel on Brexit. 10-yr area is leading the yield curve lower as

short-end remains anchored with 2s/10s 1.6bp tighter and 10s/30s 0.7bp wider.

- 2-yr Gilt yield is -0.2bp at 0.753%, 5-yr -1.4bp at 1.042%, 10-yr -1.6bp at

1.284%, 30-yr -1.0bp at 1.726% & 50-yr -1.3bp at 1.577% according to Tradeweb.

- Closer to home, there was some good news and bad news for PM May. The bad is

that the eurosceptics within her own party are looking into the possibility of

vetoing the Brexit plan. While there is more positive news coming out from

Europe with German Chancellor Merkel saying it is a solid step forward.

- UK is set to price Stg3.25bln in launch of it new Aug-2041 IL gilt at 0.625%

Mar-2040 IL Gilt +1.5bps after books reached Stg20.5bln. This was around Stg1bln

lower than markets were expecting. 

- UK Breakevens are little changed, unfazed by the syndication. While Short

sterling strip is steady to 3 ticks lower/flatter as blues outperform.