Something else to consider is that Mark Carney opened the door to further monetary stimulus measures should the Brexit malaise persist. Recent history tells us all we need to know about how much equities markets like quantitative easing.
On the fixed income side of portfolios there are also question marks of course.
Global head of fixed income at JP Morgan Asset Management Bob Michele expects a bumpy summer but has an open mind on what the mid and long term will bring. There may well be buying opportunities, he said.
“The leave vote and the uncertainty it brings will have negative near-term economic implications for the UK, but medium-term implications are less clear. UK and other-EU risk assets will be negatively impacted, as will global risk assets,” Michele said. “Financial market stress will remain high and liquidity may be a concern going into the summer months.”
“We think the flight to quality trade will continue through the summer months, as prolonged uncertainty weighs on the markets, particularly in the UK,” he said. “In reflection of a rising probability of recession, we may see some de-risking in parts of the credit market that have done well since February, including high yield debt. However, we would be buyers on any significant spread widening.”
