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Gilts trading lower, curve bear steepening,...>

GILTS
GILTS: Gilts trading lower, curve bear steepening, as geo-political risks from
Catalonia subside, for now anyway, and UK Chancellor Hammond confirms that if
there is no progress to future trade talks with the EU by the New Year, then
some contingency spending will be needed.
- Speaking to the Treasury Select Committee, 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.
- 2-yr Gilt is +3.1bp at 0.476%, 5-yr +2.6bp at 0.802%, 10-yr +2.5bp at 1.387%
and 30-yr +2.2% at 1.967% according to Tradeweb.
- There has been some small buying of bullish option trades (calls, call spreads
& calls fly), however short sterling market remains subdued.
- Swap spreads are little changed with the exception of the 2-yr which is 1.7bp
tighter. While breakevens are modestly wider.

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