Gilts have faded from session highs....>

GILT SUMMARY: Gilts have faded from session highs but remain elevated, supported

by risk-off sentiment and surprise fall in the number of employed people in the

UK. While tension in parliament and between the Tories is expected to rise as EU

withdrawal Bill continues its way through the House of commons.

- 2-yr Gilt yield is -0.6bp at 0.475%, 5-yr -2.1bp at 0.744%, 10-yr -2.8bp at

1.285% and 30-yr -2.5bp at 1.861% according to Tradeweb.

- Gilts opened Wednesday higher and then extended gains as risk off flows

continued to influence the markets with European stocks falling heavily. Gilts

then squeezed to fresh highs in wake of UK labour survey data that showed

employment falling for the first time since Oct 2016, while pay growth was

little changed at 2.2%, still way below headline inflation. One bright spot

though was the 0.9% increase in productivity in the third quarter, the highest

gain since start of 2011.

- Gilts faded though as markets took profits and looked ahead to comments from

BOE Ben Broadbent and then key US inflation data this afternoon.

- Breakevens are around 2bp tighter while swap spreads are little changed.