With the EU standing firm in its.......>

GILT SUMMARY: With the EU standing firm in its resolve to deny the UK a short

Article 50 extension without a credible plan from PM May to break the Brexit

impasse, speculation is mounting that the UK will opt for a longer extension

with the PM relaxing her red lines.

- This follows recent speculation that May could back Labour's proposed customs

union, which has incensed many eurosceptic Conservative backbenchers. The Daily

Telegraph has leaked a letter from Liam Fox in which the International Trade

Secretary argues that a customs union would be the 'worst of both worlds'.

- Gilts have rallied during the afternoon session with yields ~1bp lower on the

day. Current yield levels: 2-year 0.694%, 5-year 0.842%, 10-year 1.103%, 30-year

1.644%. 

- The Jun-198 gilt future trades at 128.15 near the top of the days range.

- Short sterling futures are 0.5-1.5 ticks higher.