Gilts have have been choppy in the.....>

GILT SUMMARY: Gilts have have been choppy in the London afternoon session and

look to close mixed with 4-6 year part of the yield curve underperforming the

rest of the curve, albeit in lightly liquid trade.

- 2-yr gilt yield is +0.2bp at 0.498%, 5-yr +1.4bp at 0.782%, 10-yr +0.7bp at

1.311% and 30-yr -0.2bp at 1.867% according to Tradeweb.

- Gilts underperformed in the morning associated with the softer tone from PM

May and Secretary Davis with their stance on Brexit. Later on Brexit Secretary

Davis suggested that the European side also needed to comprise in talks. In the

London afternoon gilts rallied higher on the back of Bunds and Treasuries. 

- Although, US housing starts data came in better than expected it had little

impact on the bond market. Traders reported that the move higher in the

Treasuries was possibly due to black box related FX buying. 

- Breakevens are little changed at the moment compared to being 1bp wider

earlier during the day and 2Y swap spreads are tighter by 2.1bp.