Gilts have pared earlier gains in......>

GILT SUMMARY: Gilts have pared earlier gains in London afternoon trade taking

cue from rise in US yields and look set to close only modestly higher, with the

yield curve holding onto its flattening move.

- 2-yr Gilt yield is -0.4bp at 0.491%, 5-yr -1.1bp at 0.781%, 10-yr -1.6bp at

1.327% and 30-yr -1.6bp 1.886% according to Tradeweb.

- A little bit of profit taking could have weighed on Gilts as well as latest

MNI Pi showed already very long positioning in Dec Gilt future, however

continued political concerns underpinned demand.

- Earlier, Dec Gilts rallied to session highs on back of weekend reports of

government infighting and renewed Brexit concerns. The Times that said 40

conservative MPs had signed a letter of no-confidence in Theresa May, while

Daily Mail broke news of a private letter from Johnson and Gove delivering their

version of Brexit to May. Tension is also building as the European Union

(withdrawal) Bill goes to committee stage tomorrow with 'conservative rebels'

looking to vote against government on at least 2 amendments.

- Swap spreads are little changed, but 5-yr & 10-yr breakevens are 2.5bp wider