The UK Gilt curve flattened on.........>

GILT SUMMARY: The UK Gilt curve flattened on Tuesday but net movements were

quite small. - The Gilt future started on the back-foot and gradually recovered

through the morning session. There was no data and no supply and so the session

ebbed and flowed with the EGB market. 

- Where there was some independence was in the index-linked space where the real

yields at the top end (30Y) of the curve were rising -- building in a concession

for the Stg950mln 2036 index-linked auction tomorrow. 

- Pension funds were evident in the 15-30Y nominals and the 25Y area was easily

the best performing section of the curve on Tuesday.

- UK Gilts have cheapened to GBP swaps and Germany considerably over the past

week but this move appeared to run out of steam on Tuesday. Cash Gilts were

volatile vs swaps but finished the day close to unchanged. The Bund-Gilt spread

declined 1.5bp from yesterday's nine month high of 93.1bp. 

- European Council President, Donald Tusk met Theresa May on Tuesday and

welcomed the UK's new 'constructive' approach but said that insufficient

progress had been made in talks.