Brexit: Capital markets began stabilizing after initial mayhem - BBH

Research Team at BBH, notes that the UK's decision to leave the EU spurred a dramatic risk-off move through the capital markets. 

Key Quotes

“The dollar, yen, and gold soared.  Equities and emerging market assets sold off hard. Core bond yields fell sharply. 

Sterling had initially rallied to poke through the $1.50 level for the first time since last years.  As it became evident that the Brexit was going to win, sterling crashed to $1.3230 before stabilizing. 

As the results became official, the capital markets began stabilizing.  The Swiss National Bank and the Danish central bank have intervened and remain active, according to reports.  On the other hand, the BOJ does not appear to have intervened, though the yen soared.  The dollar plummeted to JPY99.00 before rebounding to a little beyond JPY103.

Investors and policy makers are contemplating the implications. They are far-reaching.   What we know is that Prime Minister Cameron will step down by October.  He will trigger the now-famous Article 50 that begins the formal two-year negotiating period. That responsibility will fall to his successor. There are three candidates that have been touted:  Johnson, the former Mayor of London, Gove, the Justice Minister, and May the Home Secretary.  Johnson appears to be the early and strong favorite.”