Will Brexit Put the Bond Bull Out to Pasture?

by BCA Research
Financial Sense

Almost three weeks on from Britain’s vote to leave the EU, markets have treated this political event as a negative local growth shock but a positive global interest rate shock. The upshot has been a surge in risk assets presumed less vulnerable to the growth drag, but benefiting from the ubiquitous plunge in bond yields. A spike in economic uncertainty, derived from the political uncertainty that the Brexit vote unleashed, drove government bond yields to new lows, as investors sought the safe harbor of high quality government bonds as a hedge against weaker global growth. The critical question is whether or not political uncertainty will actually translate into economic deterioration.

Continue Reading at FinancialSense.com…