WEEKLY UPDATE: There has been a......>

SHORT-STERLING: WEEKLY UPDATE: There has been a modest bull flattening of the

Short Sterling curve this week with White contracts largely unchanged, Reds up

1-2 ticks, Greens up 2-3.5 ticks and Blues up 4-5 ticks.

- As with Euribor, the longer-end of the Short Sterling curve has been dragged

higher by largely international factors with concerns surrounding US trade with

China, a repricing of US rate hike expectations, and broader worries about a

slowing global economy all pulling Greens and Blues in particular higher.

- Brexit uncertainty has continued to dominate UK markets, with the Advocate

General of the ECJ provisionally stating that the UK could withdraw from Article

50 unilaterally (the final ECJ decision should be on Dec 10). Parliament also

voted to give itself the power to decide the next steps should the Dec 11 vote

on PM May's withdrawal bill be defeated (which is looking increasingly likely).

Indeed, betting odds on the chance of the UK staying in the EU have shortened.

- What happens politically upon a defeat of the May deal is still unclear and is

likely to set the agenda for UK markets. If we edge towards a softer Brexit or

staying in the EU, Short Sterling is likely to sell off sharply.