Edge Capital Research Team
It is not often that financial markets are so dramatically wrong about a potential outcome. As would be expected in the weeks going into the UK referendum on whether to stay in the European Union, there was volatility across financial markets. Bond yields fell, perceived safe haven currencies strengthened, and equity markets moved lower. As the day of the vote approached, however, markets seemed to gain confidence. On the day of the vote, the British pound rallied. Equity markets too rallied as bond yields fell. It seemed that market consensus was that despite the relative balance in the polls between those who would vote to Remain versus Leave that the large percentage of Undecided would tend towards status quo. As the vote tally came in, that assumption was proven wrong. The preliminary results of the “Brexit” referendum puts a 52% majority in the “Leave” camp.