Gilts remain in negative territory,....>

GILT SUMMARY: Gilts remain in negative territory, weighed by EGB supply, PM

Theresa May not being challenged and Brexit headlines that point to possible

progress on Brexit negotiations. Yield curve is slightly bear flattening as

short-end comes under most selling pressure.

- 2-yr Gilt yield is +2.3bp at 0.751%, 5-yr +1.9bp at 1.049%, 10-yr +1.7bp at

1.293%, 30-yr +1.5bp at 1.728% & 50-yr +0.9bp at 1.582% according to Tradeweb.

- Gilts slipped lower at the open, weighed by heavy slew of EGB issuance and

news that PM May was safe in her job for now as Jacob Rees-Mogg told reporters

they did not expect a confidence motion to be brought after May met the

parliamentary party in a bid to get their support for her plan.

- Gilts did bounce off session lows following mixed UK data and then rallied

strongly in the afternoon on fresh concerns Italy might leave the Euro. However

quickly reversed gains and dropped to session lows as Irish PM Varadkar says EU

might be able to show some flexibility in Brexit talks.

- Sstg futures are 1 to 2 ticks lower, curve touch steeper as blue contracts

underperform. Breakevens touch wider but of swap spreads circa 2bp tighter