The markets after Brexit

By The Economist online..
OUR third look at the impact of the Brexit referendum* concerns the effect on the financial markets. Market movements can affect the economy (higher gilt yields, for example, would make it harder for the government to finance its deficit; lower equity prices could dent confidence) but they also act as a signal. Other things being equal, a decline in the pound, a rise in gilt yields or a fall in equities indicate that investors are finding British assets less attractive, and points to their assessment of the economic impact of the vote. As in the other blogs, I will be drawing on the views of investors, economists and thinktanks for evidence.

On sterling, the view is pretty universal; a Brexit vote would cause the pound to fall. A Bloomberg poll of economists found that 29 of 34 saw a decline below $1.35 and only one saw the pound above $1.40 (at the time of writing, the pound is around $1.42). Among investors, Blackrock, the biggest fund manager in the world, says that

Sterling is most vulnerable…

…read more

Read more here: The markets after Brexit

Category: Business and finance, Buttonwood’s notebook

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