Gilts took another leg higher during...>

GILT SUMMARY: Gilts took another leg higher during London afternoon session

following weaker than expected US MNI Chicago report, having found risk-off

support earlier in the day. Yield curve looks to end slightly flatter as

short-end lags a little.

- 2-yr Gilt yield is -3.8bp at 0.79%, 5-yr -4.5bp at 1.17%, 10-yr -4.5bp at

1.515%, 30-yr -4.2bp at 1.91%, 50-yr -4.6bp at 1.682%.

- The main news in the morning that supported rise in Gilts and drop in the

pound was the release of the EU's draft Brexit withdrawal agreement and it did

not provide pretty ready for the Tory government. Newswires highlighted it

states the transitional deal ends on Dec 31, 2020, demands Northern Ireland to

remain in the Customs Union and for the UK to be bind by ECJ rules until the

2030s. During PM questions Theresa May said that no Prime Minister would accept

such a deal as it threatens the "constitutional integrity" of the UK.

- A Larger than expected fall in US MNI Chicago report saw Gilts touch session

highs before stabilizing near in upper range. Breakevens are circa 1bp tighter

while swap spreads are steady to 1.7bp wider, led by the 2-yr.