Whether it was UK Prime Minister.......>

GILT SUMMARY: Whether it was UK Prime Minister Theresa May's painful speech or

the in-line US ADP employment numbers is not clear (or maybe a bit of both), but

Gilts pared gains in the afternoon before moving lower in wake of very strong

ISM non-mfg composite and now set to close mixed with curve steeper.

- PM May's speech started off well apologising for the election fiasco and

announcing more money for housing, but quickly fell into a bout of coughing that

she did not recover from and a prankster who delivered a P45 from Boris Johnson,

that will likely call into question her fitness to run the country.

- 2-yr Gilt yield is +0.1bp at 0.451%, 5-yr +0.5bp at 0.789%, 10-yr +1.0bp at

1.37% and 30-yr +1.9bp at 1.935% according to Tradeweb.

- Gilts opened strongly on the back of move higher in USTs and continued tension

in Catalonia. However reversed gains following surprise upside to UK service

PMI. However dip buying and recovery in German Bunds following decent 10-yr

auction helped Gilts recover back near to session highs.

- UK breakevens are 3bp wider across the board, while swaps spreads are tighter

with 15-year 1.8bp narrower on the day.