Market Overview – Markets move past Brexit!
World Capital Markets quickly reversed after a knee-jerk sharp two day sell off from Friday, June 24th to Monday, June 27th in the aftermath of the UK vote to exit the European Union. However, the DJIA average recouped the two-day 871-point route ending the quarter plus 790 points in the final four trading days. Including July 1st, the US markets had their best week of the year. However, the story of the 2nd quarter and that of 2016 thus far is the action in the bond markets. The 10-year US Treasury note briefly fell below its lowest level ever at 1.385% on the first day of trading in the third quarter. The market is now firmly of the belief that Brexit collateral damage uncertainty will exert pressure on world central banks to pump even more stimulus to world economies. Brexit has put a downward trajectory on the British Pound sterling, and sparked additional demand for US Treasuries and the US dollar. Gold has caught a bid. Recent events suggest that The Federal Reserve may remain in a holding pattern as well.