Having appeared to have clinched a.....>

GILT SUMMARY: Having appeared to have clinched a significant concession from the

EU on the Irish backstop, UK PM Theresa May has suffered a fresh blow as

Attorney General Geoffrey Cox has not changed his legal opinion that the

existing proposals do not offer a unilateral way out of the backstop.

- Gilts and US TSYs rallied on the AG Cox headline, with cable dipping towards

the 1.30 level.

- Having climbed ~4-6bp by mid-morning, gilt yields have subsequently returned

towards yesterday's closing levels. Current yield levels: 2-year 0.729%, 5-year

0.904%, 10-year 1.182%, 30-year 1.688%.

- The curve has steepened on the day with 2s30s trading up to 95.3bps from a low

of 92.7bps.

- The Jun-19 gilt future trades at 127.23 at the highs of the day.

- Inflation breakevens trade close to unch.

- Mirroring price action in gilts, the short sterling futures strip had

steepened earlier in the session, but has subsequently pared back. Greens/blues

now 0.5 ticks lower.