Gilts pared losses in the afternoon....>

GILT SUMMARY: Gilts pared losses in the afternoon helped by large block buy in

US Tsy future, however, remain modestly lower with the yield curve bear

flattening as the short-end continues to underperform.

- 2-yr Gilt is +1.5bp at 0.46%, 5-yr +1.5bp at 0.791%, 10-yr +1.3bp at 1.375%

and 30-yr +0.5% at 1.95% according to Tradeweb.

- The main news in the UK which weighed on sentiment were comments from UK

Chancellor Philip Hammond at the Treasury Select Committee. Hammond confirmed

that if there is no progress to future trade talks with the EU by the New Year,

then some contingency spending will be needed.

- Hammond also said that the uncertainty over Brexit negotiations is having a

negative impact on the UK economy and have to be prepared for a "no-deal"

scenario. Hammond also added that the UK has a "fundamental productivity

problem" and is looking at ways to address this.

- Swap spreads are little changed with the exception of the 2-yr which is 1.8bp

tighter. While breakevens are between 1.1bp and 2bp wider.