Gilts opened little changed but then...>

GILT SUMMARY: Gilts opened little changed but then squeezed higher with yield

curve shifting lower by around 1bps as markets eye next moves in the Brexit

saga. 10-yr Gilt yield is 1bp lower at 1.276%.

- Markets are still digesting the ramifications of Northern Ireland's DUP, who

are currently propping up the Conservative government, scuppering the possible

Brexit agreement yesterday, as they were concerned over the wording of the Irish

border agreement. It is now seen for PM May to try and get the DUP on side so

that an agreement can be found before the EU leaders summit in 9-days time.

- Elsewhere BRC like-for-like sales rose by 0.6% in November, however data

showed that this was due to increase in food sales as Black Friday sales failed

to increase non-food sales.

- Looking ahead there is UK service PMI released at 0930GMT with consensus

seeing a slight slip to 55.0 in November from October's rise to 55.6. While the

DMO taps 0.75% 0.75% 2023 Gilt for Stg2.75bln which could weigh on the short-end

of the curve.