Late buying sees Gilts edge lower......>

GILT SUMMARY: Late buying sees Gilts edge lower and curve flatten as ultra

long-end outperforms the rest of the curve as markets price near 91% chance of

BoE rate hike next week.

- 2-yr Gilt yield is -0.3bp at 0.756%, 5-yr -0.3bp at 1.015%, 10-yr -0.3bp at

1.263% 30-yr -0.3bp at 1.708% & 50-yr -1.3bp at 1.550% according to Tradeweb.

- Gilt future faded lower after hitting session high shortly after midday London

time, taking cue from sharp sell-off in US Treasuries as US traders got to their

desks. News that PM May is taking control over Brexit negotiations directly then

added further selling pressure to Gilts, however, $/Yen falling below 111 level

triggered recovery in US Tsys and therefore UK Gilts as well.

- Earlier Brexit secretary Dominic Raab said that the withdrawal agreement with

the EU is 80% complete but confirmed that the UK might need to pay more than the

estimated Stg36-Stg39bln. UK/EU continue Brexit talks this week and Raab

confirmed he would be meeting regularly with Michel Barneir during the summer

- Mar, Jun, Sep & Dec 2019 Sstg contracts are 2 ticks lower as markets price in

higher chance of BoE hiking rates next week and in 2019 according to MNI PINCH.