UK gilts narrowly mixed in muted trading session ahead of August manufacturing production

The United Kingdom’s gilts remained narrowly mixed during European trading hours Monday amid a muted trading session that hardly witnessed any data of major economic significance ahead of the country’s monthly GDP and manufacturing production for the month of August, scheduled to be released by end of this week.

The yield on the benchmark 10-year gilts, slipped 1/2 basis point to 0.440 percent, the 30-year yield hovered around 0.942 percent while the yield on the short-term 2-year lost nearly 1 basis point to 0.343 percent by 11:10GMT.

Brexit will inevitably remain centre-stage this week as well as talks continue between the UK and EU at different levels of seniority to determine whether there is scope for a deal to be reached at the forthcoming EU Summit on October 17-18, Daiwa Capital Markets reported.

However, at this stage the EU is clearly unable to accept Johnson’s proposals, not least due to the veto on Northern Irish regulatory alignment with the EU provided to the Northern Irish Assembly, as well as the requirement for the re-establishment of customs checks on good shipments between Northern Ireland and the Irish Republic, the report added.

So, the UK Government will need to shift its position and present acceptable new legal text by the end of the week to keep open the possibility of an agreement at the Summit. If not, although a further Summit later in the month would not be ruled out, the focus on October 17-18 would shift to preparing for either a no-deal scenario or a further Article 50 extension, Daiwa further noted.

Meanwhile, the FTSE 100 edged tad 0.28 percent higher to 7,176.11 by 11:15GMT.