The 10Y Bund future contract grinded...>

GILT SUMMARY: The 10Y Bund future contract grinded lower for much of the London

trading session. The 10Y future contract broke below the 21-DMA support level of

124.08 and fell to fresh session lows of 123.96 on the back of selling in the

USTs and German bunds as markets positioned possible Fed chair announcement and

ECB meeting Thursday. However, pared losses and is currently trading at 124.09.

- Earlier in the day UK Chancellor of the Exchequer Philip Hammond failed to

deviate from PM Theresa May's position that a transition deal would only be

reached as part of a larger Brexit agreement. The position of the PM and the

Chancellor has been particularly concerning for businesses who have been seeking

reassurances that some kind transitional deal will be reached. The gilts were

largely unaffected by the Chancellor's comments and continued its downward trend

for much of the day.      

- 2-yr Gilt yield is +3.4bp at 0.467%, 5-yr +4.2bp at 0.800%, 10-yr +5.3bp at

1.356% and 30-yr +3.9bp at 1.920% according to data from Tradeweb.

- UK breakevens are currently trading almost unchanged and swap spreads are

mixed with the 2Y currently trading 2.7bp tighter while the 15Y is 0.65bp wider.