The 10Y Dec17 Gilt futures contract....>

GILT SUMMARY: The 10Y Dec17 Gilt futures contract headed lower after a positive

open. The move lower appears to be on the back of reports that PM May is willing

to increase her divorce bill offer to the EU and that cabinet ministers have

indicated that they are willing to accept the new conditions. This report

appears to have pushed Cable higher and in turn pushed Gilt futures lower.

- Gilt futures pared much of losses as the morning progressed and markets seem

to be trading on thin volume, which could provide some explanation for the

choppy trading. 

- The 2Y-5Y part of the yield curve has underperformed compared to the 10Y-30Y

part.

- 2-yr gilt yield is +1.5bp at 0.503%, 5-yr +1.1bp at 0.785%, 10-yr +0.9bp at

1.313% and 30-yr +0.6bp at 1.867% according to Tradeweb.

- UK swap spreads are slightly tighter with the 2Y trading 0.2 tighter, while

breakevens are wider with 5Y trading 1bp wider.