Gilts have faded from their early......>

GILT SUMMARY: Gilts have faded from their early morning rally but remain higher

than Friday's close with the yield curve flatter, underpinned by weekend reports

of government infighting and renewed Brexit concerns.

- 2-yr Gilt yield is -1.7bp at 0.477%, 5-yr -2.9bp at 0.763%, 10-yr -3.6bp at

1.308% and 30-yr 3.4bp 1.868% according to Tradeweb.

- Markets concentrating on an article in the Times that said 40 conservative MPs

have signed a letter of no-confidence in Theresa May, only 8 short need to force

a leadership challenge. While the Daily Mail broke news of a private letter from

Boris Johnson and Michael Gove delivering their version of Brexit to Theresa

May, with renewed calls for them to be sacked.

- The tension is seen building as the European Union (withdrawal) Bill goes to

committee stage tomorrow where there are a 186 pages of amendments to go through

with the government hoping to keep the damage to a minimum.

- Volumes have been thin though with a dearth of UK & EU data seen to guide

markets, but this changes tomorrow with UK CPI and comments from Carney/Cunliffe

- Swap spreads are wider, led by +1.6bp in 2-yr, breakevens little changed