Gilts have opened modestly lower.......>

GILT SUMMARY: Gilts have opened modestly lower with the yield curve bear

steepening, taking cue from soft US Treasuries overnight, while London markets

continues to find it's feet. 10-yr Gilt yield is 1.3bp higher at 1.22%.

- Overnight in the UK saw Priti Patel resign as international development

secretary, which leaves PM May to fill another space in the cabinet. Newspapers

talk of EU preparing for the collapse of either Theresa May or the whole

government by Christmas as Brexit talks enter a crucial stage with the UK hoping

for talks to move onto possible transitional deal but with the EU holding firm

on the 3 main issues for now.

- Ian McCafferty weighed in with a stark warning on Brexit saying on LBC radio

last night that clarity would be needed early next year to prevent investment

banks shifting jobs from the UK to Europe. On Rates McCafferty was firmly in the

"2 more rate hikes needed to get inflation back to target" camp.

- Looking ahead there is little UK data released today, however, DMO re-open

0.75% 2023 Gilt for Stg2.75bln and another round of Brexit negotiations start

today but only for 2-days and expectations for a breakthrough are low.