This morning UK PMI set the tone for...>

GILT SUMMARY: This morning UK PMI set the tone for the Gilt contract during our

London afternoon session. 

-UK PMI disappoints but the overriding theme in the report is Brexit

uncertainty, but stock unwinding has also helped push manufacturing lower.

Service PMI dropped to the lowest level since July 2016 (immediately after the

referendum when many responses would have been received before the vote outcome

was known). 

-This pushed the Pound lower and back below the 1.2900 handle, while helping

Gilts higher, which also traded in tandem with other EU Govies. 

-The session stayed within ranges, given some market participants some

opportunities into the Gilt Roll with the spread trading 76k futures. 

-Focus now turns to next week, with the possibility (but not definite) that

YouGov will release their much-watched MRP (multilevel regression with

post-stratification) poll for the December 12th UK election.

- Gilt futures are up 0.48 today at 131.92 with 10y yields down -4.1bp at 0.710%

and 2y yields down -3.8bp at 0.530%.