Gilts look set to close modestly.......>

GILT SUMMARY: Gilts look set to close modestly higher, with the 10-yr part of

the yield curve leading the way, underpinned by earlier risk-off sentiment flows

on concerns of possible trade war. While PM May's vision for life after Brexit

only got a warm reception.

- 2-yr Gilt yield is -0.6bp at 0.759%, 5-yr -2.2bp at 1.106%, 10-yr -2.6bp at

1.441%, 30-yr -2.0bp at 1.852% and 50-yr -1.7bp at 1.636%.

- Gilts were trading close to intra-day highs before slipping lower at start of

PM May's keynote Brexit speech which outlined UK's relationship plans with the

EU after Brexit, but regained lost ground as those plans look like they will be

dismissed by the EU as "cherry picking". Gilts then came under selling pressure

taking cue from sell-off in USTs ahead of London close  

- Earlier markets dismissed the slightly higher than expected rise in UK

construction PMI, as focused remains on key service sector on Monday. While

comments from BoE Governor Mark Carney was on regulation of crypto-currencies

and did not touch upon current monetary policy.

- Breakevens are mixed/flatter and swap spreads mostly tighter