Brexit amplifies uncertainty

THE UK vote to leave the EU surprised almost everyone, especially market participants. It left unprecedented uncertainty about future economic and political relations between the UK and the EU.

From the US perspective, the market sell-off has been large but orderly. Indeed, global markets began to stabilise on June 28, after two days of probing for equilibrium prices and their implied trajectories.

While spot prices have stabilised, there appears to be little conviction among traders and other financial market participants about the course of exchange rates and asset prices.