Gilts are trading steady to modestly...>

GILT SUMMARY: Gilts are trading steady to modestly higher, reversing earlier

opening losses, as UK manufacturing PMI falls to a 25-month low and following

comments from Michel Barnier that he strongly opposed" to PM May's Chequers

proposals. The 10-yr part of the curve is seen leading the move higher.

- 2-yr yield is -0.3bp at 0.731%, 5-yr -1bp at 1.032%, 10-yr -1.1bp at 1.422%,

30-yr -0.4bp at 1.771% & 50-yr 0.2bp higher at 1.635% according to Tradeweb.

- Gilts initially opened lower with yields rising by around 0.8bp across the

curve despite latest negative comments on Brexit from Michel Barnier and

weakness in Sterling. Gilts recovered lost ground within an hour however, as

markets started to build in a little more political risk and following weak

Italy and surprise downside amendment to French & German mfg PMI's.

- Dec Gilt future then spiked to fresh high in reaction to UK mfg PMI coming in

at 52.8, vs 53.8 in July and consensus for a 53.9 reading. There was decent

buying in the front end of short sterling following the PMI number as well but

this later gave way to some heavy selling later. Reds & Greens are +3/4 ticks

- US closed this afternoon so attention will remain on comments from officials