Gilts are trading modestly lower.......>

GILT SUMMARY: Gilts are trading modestly lower seen weighed by surprise rise in

UK average weekly earnings and sell-off in US Treasuries and German Bund. Prices

are off intra-day lows though on late buying in 10-yr futures.

- 2-yr Gilt yield is +1.5bp at 0.433%, 5-yr +2.4bp at 0.758%, 10-yr +2.4bp at

1.307% and 30-yr +2.0bp at 1.873% according to Tradeweb.

- Majority of the action happened in the first half with Gilts opening opened

modestly higher, underpinned by continued concern over Brexit with warnings of a

delay to a transition deal agreement, but faded the move as market looked ahead

to key UK labour Market Survey.

- Tick higher in AWE ex-bonus seemed to be the catalyst for selling in Gilts,

which was then picked up by UST market which sold off heavily

- Another bout of selling in German Bunds and spike in equities pushed Gilts to

intra-day lows, although some light buying enabled them to pare losses. Block

buy in G Z7 contract then push Gilts off session lows ahead of close.

- 2-yr swap spreads have tightened sharply following 2-days of moving higher and

are back below 36bps. While 10-yr & 30-yr breakevens are circa 2.5bp tighter