Indications that the cabinet will......>

GILT SUMMARY: Indications that the cabinet will meet on Tuesday to discuss

Brexit, including the prospect of a no-deal scenario, has provided some fuel to

the gilt sell-off this morning. 

- Gilt yields have pushed higher across the curve since the open. The benchmark

2-year gilt trades at 0.816% up from a low of 0.787% while the 10-year yield has

pushed up to 1.519% from 1.483%.

- The curve has also steepened with the 2s10s spread widening to 69.6bps from

68.5bps.

- The short sterling futures strip is broadly down 1.0-2.0 ticks. Option flow

has been relatively limited with the exception of: 20k Sep19 98.75/98.50 1x2 put

spread paid at 3 vs L U9 @98.89.

- Despite the downside pressure on gilts, cable is the outperformer in G10 FX

this morning.

- PMI data for October was weaker than expected with Services print coming in at

52.2 vs 53.3 survey and the composite series reading 52.1 vs 53.4 survey.