Gilts opened lower, but have spent.....>

GILT SUMMARY: Gilts opened lower, but have spent the remainder of the morning

session reversing though losses as UK government borrowing comes in lower than

expected. A large 15-year swap receiver also seam to have supported recovery in

Gilts.

- 2-yr Gilt yield is -0.9bp at 0.208%, 5-yr -0.1bp at 0.485%, 10-yr +0.6bp at

1.070% and 30-yr +0.2bp at 1.726 according to Tradeweb.

- Gilts have opened modestly lower with the long-end seen taking the brunt of

the selling and therefore steepening the yield curve, as market traded with a

mild risk-on tone.

- The move is despite growing concerns over the Brexit talks and perceived lack

of progress being made on the three main core issues that the European Union

insist on resolving before moving onto any form of trade talks. The UK Brexit

department is expected to release another position paper later today though

- Gilts turned around following a large 15Y swap trade that appeared to be a

receiver, and then following a surprise Stg0.2bln surplus in July borrowing vs

expectations of a Stg0.3bln deficit.