There are increasing signs that the....>

GILT SUMMARY: There are increasing signs that the UK and the EU are inching

closer to a withdrawal agreement. A UK Cabinet Office minister has indicated

that an agreement could be finalised within the next 48 hours, while the EU

chief Brexit negotiator Michel Barnier has stated that the key elements of a

withdrawal treaty are ready for PM Theresa May to review.

- Despite these developments, gilts have been relatively unperturbed. Even if

the UK and EU reach agreement on a withdrawal arrangement, the parliamentary

math still presents a formidable hurdle. 

- The 2-year gilt yield has edged up to 0.764% from a morning low of 0.742%,

while the 10-year yield is up to 1.477% from 1.445%.

- The curve has steepened with the 2s10s spread trading up to 70.7bps from a low

of 69.0bps.

- The Dec gilt future trades at 122.05 off the 122.39 high.

- The short sterling futures strip is broadly 1.0-3.0 ticks lower.

- The unemployment rate for September ticked higher to 4.1% from 4.0%, while

growth in average weakly earnings wages came in line with expectations at 3.0%.