Short Sterling strip flatter in line with US/EZ counterparts, Gilts to gap up markedly

Mirroring long end outperformance in Eurodollar and Euribor futures, but amidst a shallower gradient (flat to 2 ticks ahead at best) UK STIR futures are now looking for some independent inspiration from the services PMI that is expected to pick up modestly, though could surprise to the upside if manufacturing and construction beats are a reliable guide. Note, however, Lloyds’ business barometer was softer than previous and has proved accurate in terms of direction in the past. Back to Liffe, and Gilts look all set for a healthy mark-up and may regain 122.00 or plus status vs their previous 121.60 settlement given a half point or so rebound in Bunds.