Gilts just recovered from earlier......>

GILT SUMMARY: Gilts just recovered from earlier morning losses when they sold

off sharply in reaction to surprise tick higher in US core CPI and then newswire

reports of Spain and the Netherlands seeking a "soft Brexit". Gilts did bounce

off session lows however remain in negative territory.

- The yield curve has bear flattened significantly, with 5s/30s tightening by

3bps to 97.7bps, a fresh 9-yr low. 10-yr Gilt yield is 2.9bp higher at 1.338%.

- Bloomberg, quoting a source said that both Spanish and Dutch finance ministers

have agreed to seek a 'soft Brexit' deal as they are worried about impact of

tariffs. 

- Further good news for London on Brexit, this time reported from Reuters "EU

parliament plans to soften proposals on forced relocation of clearing houses

after Brexit", also weighed on Gilts and supported the rally in cable. All this

added to earlier hope that there might be a second EU referendum and if the

latest poll is to be believed would be won by Remainers.

- 5-yr breakevens broke above 3% earlier but have since reversed widening move

and are now 1bp tighter at 2.98% despite higher US core CPI as Sterling rallied