Gilts have rallied amid equity.........>

GILT SUMMARY: Gilts have rallied amid equity weakness and continued

will-they-won't-they speculation over a Brexit deal reached in short order.

- The negative correlation between equities and bonds has reasserted itself

after weeks of Gilts and the FTSE moving in tandem. As such, with the FTSE off

1.2% today (2.5% since Wednesday's open), the Dec 18 Gilt future is up 41 ticks

at 120.00, near highs (range of 119.89-120.0/ today).

- The curve has bull flattened: 2-Yr yield is down 3.5bps at 0.878%, 5-Yr is

down 4.1bps at 1.247%, 10-Yr is down 5bps at 1.678%, and 30-Yr is down 3.6bps at

2.049%.

- Short Sterling has likewise rallied, with Reds through Blues up 4.0-5.0 ticks.

- Comments this morning by Irish PM Varadkar that a November Brexit deal may not

be possible helped propel Gilts to early intraday highs. 

- Main piece of data today (and indeed for the rest of the week) is the BoE's Q3

Credit Conditions survey, out at 0930BST. Next piece of data is not until

Aug/Sep labour market numbers on Tuesday.