Gilts have reversed Monday's rally.....>

GILT SUMMARY: Gilts have reversed Monday's rally with the 10-year yield

currently very close to Friday's closing level of 1.362% as flight-to-quality

bid fades and political concerns weigh.

- 2-yr Gilt yield is +2.3bp at 0.450%, 5-yr +2.1bp at 0.781%, 10-yr +3.0bp at

1.357% and 30-yr +2.6bp at 1.911% according to Tradeweb.

- Gilts opened weaker with yields around 2.5bp higher across the board, pretty

much wiping out Monday's gains as markets traded with a mild risk-on tone.

- Gilts extended sell-off ahead of UK construction PMI on light but steady

selling in futures, but bounced off lows as construction PMI dropped below 50

for the first time since August 2016. However, Gilts slipped lower once more,

taking cue from weak Bunds following higher than expected Eurozone PPI data.

- Gilts then held a tight lower 10 tick range until finding a small bid on the

back of bounce in German Bunds.

- There was no new news from the Conservative Party conference, with FM Johnson

standing steadfast behind PM May and the Cabinet on Brexit.

- Breakevens are steady to 1BP wider, while swap spreads are 0.5-2.5bp tighter.