Gilts yields opened modestly higher....>

GILT SUMMARY: Gilts yields opened modestly higher on Tuesday, but has since

pared back some of these gains. The 2-yr, 10-yr and 30-yr gilts are currently

trading at 0.436%, 1.365% and 1.951% all slightly less than 1bp higher than at

Monday's close.

- PM May has said that the UK has plans to leave the UK without a deal with the

EU. 

- There is a GBP 2.5bln-sized Gilt 2037 auction today with the elephant in the

room being the uncertain political backdrop. However, the metrics for the

auction are good. The 2037 yield is 1.946%, which is close to the highest yield

since February. Furthermore, longer dated Gilts have cheapened versus swaps.

- Cable is resurgent this morning and has just surpassed the highs from

yesterday. 

- In terms of UK economic data, we have the industrial production, manufacturing

production and the trade balance data out today. Catalan issues will also help

determine any risk sentiment; the leader of the Catalonia will address the

regional parliament this evening.