- The early morning rally in gilts.....>

GILT SUMMARY: - The early morning rally in gilts has reversed. 

- Following another broadside from former Foreign Secretary Boris Johnson in the

Daily Telegraph on Sunday, Prime Minister Theresa May has warned  that it is

'Chequers or no deal'. The IMF has further upped the ante by warning of the

substantial costs of a no-deal Brexit.

- The benchmark 2-year gilt yield has pushed up to 0.8196% from a morning low of

0.799%, while the 10-year trades at 1.537% up from 1.514%.

- On the back of the long end underperforming the curve has steepened slightly

with the 2s10s spread ticking up to 71.1bps from 70.6bps.

- Short sterling futures are broadly flat, albeit with greens down 1.0 ticks.

Short sterling option flow has been relatively light this morning.

- The 5- and 10-year breakeven rates are little changed and continue to trade

above 3.0%.

- Rightmove House Price data indicate a slight acceleration in September to 1.2%

Y/Y from 1.1% the previous month. The next significant data release will be the

CPI report for August, which will be published on Wednesday.