Gilts have given up earlier mild.......>

GILT SUMMARY: Gilts have given up earlier mild gains and are now trading lower,

curve steeper, as better than expected UK service PMI data outweighs Brexit

concerns which could weigh on future outlook for the UK economy.

- 2-yr yield is +0.6bp at 0.750%, 5-yr +bp at 1.035%, 10-yr +1.1bp at 1.438%,

30-yr +1.2bp at 1.797% & 50-yr +1.2bp at 1.664% according to Tradeweb

- Dec Gilt future opened little changed but slowly edged higher on back of

downside revision to both French and German service PMI, but then pared gains in

wake of better than expected UK service PMI which rose to the highest level

since February.

- Delving deeper into the PMI though, it was only the financial service sector

that showed any strong growth, while business expectations and optimism fell

sharply, likely on the back of Brexit concerns and indicated downside risks to

the outlook for the UK economy. This helped Gilts recover temporarily, but they

quickly came under heavy selling pressure and hit fresh lows on little new news.

- There has not been much movement in short sterling futures, with white

contracts supported by earlier large buying in Dec8 contract.