Renewed concerns over breakdown in.....>

GILT SUMMARY: Renewed concerns over breakdown in Brexit talks has led to the

recovery in UK Gilts this afternoon and look set to close near session highs.

- Gilts had pretty much recovered from sharp opening move lower before Bloomberg

put out a headline -- "UK is said to see Brexit breakdown if EU refuses to

compromise", and the EU put out an updated EU statement tightening the

conditions for UK to comply with before talks could progress, which pushed Gilts

higher and flattened the yield curve.

- 2-yr Gilt yield last -1.5bp at 0.453%, 5-yr -2.1bp at 0.786%, 10-yr -3.0bp at

1.336% and 30-yr -3.0bp at 1.892% according to Tradeweb.

- Gilts opened sharply lower with the 10-yr Gilt rising by over 4bp at one

stage, weighed by overnight move lower in US Treasuries and as markets had first

chance to react to BoE Carney comments late Friday -- "we are running out of

that spare capacity and that tolerance for having inflation over target", and

news that May/Davies were to have dinner/talks with Juncker & Barnier.

- Majority of sap spreads are tighter with the 15-yr seen leading the way at

-1.2bp, while breakevens are little changed.