Gilts look set to close lower, yield...>

GILT SUMMARY: Gilts look set to close lower, yield curve steeper as markets

react to latest Brexit news that could lead to brake in deadlock in talks.

- 2-yr yield is +2.0bp at 0.764%, 5-yr +3.2bp at 1.061%, 10-yr +4.0bp at 1.467%,

30-yr +4.1bp at 1.826% & 50-yr +4.3bp at 1.695% according to Tradeweb

- Gilts sold off sharply in the afternoon, weighed by newswire report that

Germany and the UK look to drop key Brexit demands and have less details on

possible future relationship in hope to get withdrawal deal agreed by November.

The Irish border issue though still remains. Dec Gilt future dropped circa 40

ticks in reaction to the Bloomberg headlines as markets priced in a smaller

chance of a no-deal scenario.

- BoC leaving monetary policy on hold and sharp sell-off in European and US

stocks helped push Gilts off session lows though.

- Earlier better than expected UK service PMI led to first initial fade in

Gilts.

- Short sterling strip is steeper as blue contracts sell-off by 3 to 4 ticks

while whites are -0.5 to +1 ticks. 5-yr & 10-yr breakevens are 2bp tighter