Gilts have inched higher with the......>

GILT SUMMARY: Gilts have inched higher with the short-end end outperforming and

in-turn bull steepening the the yield curve, supported by growing domestic

political uncertainty, possible delays in agreeing a Brexit transitional deal

and forecasts of a negative impact of growth following Brexit.

- 2-yr Gilt yield is -2bp at 0.599%, 5-yr -1.9bp at 0.96%, 10-yr -0.9bp at

1.445%, 30-yr -1bp at 1.877% and 50-yr -1bp at 1.662%.

- A leaked government report shows the UK will be worse off under three

different Brexit scenarios (comprehensive free trade deal, single market access

or no deal) and is seen as an embarrassment for the government. The Telegraph

reports Theresa May will "go into battle" with the EU over free movement of

people and accepting new EU laws. While The Times reports that there are growing

calls for PM May to step down.

- Mortgage approvals in the UK dropped sharply in December according to latest

data from the Bank of England, however, had little impact on markets.

- Sterling has bounced off lows vs US Dollar and Euro, but breakevens remain

around 0.5bp wider, while long-end of swap spreads are 1.4bp higher.