Post-Brexit, markets now focus on prospects of rates staying low

US STOCKS rebounded last week to finish higher than where they were before the shock Brexit vote as traders focused on the silver lining in the midst of a very cloudy outlook - lower interest rates for longer.

Already, Bank of England governor Mark Carney has said that he will cut interest rate to offset the impact of Brexit. The vote also changed the interest-rate outlook in the eurozone, and, most importantly, in the US - as Dallas Federal Reserve president Robert Kaplan has repeatedly noted, world markets are now so intertwined that the central bank cannot simply ignore Brexit.

The Fed was expected to resume hikes in September, but now will likely hang up its spurs for the year. The weakness of sterling - which hit a three-decade low last week - and euro in the wake of the vote has caused another round of US dollar appreciation, a phenomenon the central bank has already noted as a negative for US exporters.