This morning has been mainly a story...>

BOND SUMMARY: This morning has been mainly a story of retracement in core bond

markets, with markets moving close to levels seen around the European open yday.

- Brexit rhetoric continues to dominate the market's psyche with focus on

tonight's vote of the second reading of the Withdrawal Agreement Bill (WAB) and

the vote on the "progress motion" i.e. the timetable for debate in parliament.

It is generally expected that the WAB will pass it's second reading but the

progress motion vote is a much closer call with gilts moving higher on concerns

that the timetable will not be approved. This would make the October 31 deadline

very difficult to achieve, remove the pressure on MPs to quickly back the deal

and could see Brexit uncertainty dragged out even further.

- There has also been focus on the EU announcing that many countries are missing

the EU budget recommendations (France, Italy, Portugal, Belgium, Spain

etc). This has also helped bonds move higher but we note that if the ECB wants

fiscal expansion in the Eurozone, this is exactly what is needed.

- TY1 futures are up 0-4 today at 129-24 with Bund futures up 0.38 at 171.27 and

Gilt futures up 0.27 at 131.66.