What the asset classes are telling us about BREXIT one week later

One week after BREXIT the markets are sending clear price signals on what investor think. It may not be exactly what anyone would have expected and the signals differ based on the market. Someone is going to be wrong and the odd market is UK equities.

• Bonds - The signal is clear. There has been a flight to safety in fixed income mixed with expectations of an economic slowdown and easing by the Bank of England. The strong trend  made this a trade that most benefitted investors. The fear of uncertainty crowd was rewarded.
• Currencies - The impact on sterling was consistent with bonds, poor growth tied with central bank easing as a stop-gap. However, the market was caught leaning to remain before the vote and was surprised after the results. There has been little positive bounce since the vote.
• Equities - Here the story is more complex. The FTSE 100 actually reversed the loses from BREXIT. If you fell asleep and just saw the end of month levels versus the pre-vote levels, you would assume that the vote was to remain. 

The equity market as measured by the FTSE 100 index is out of step with bonds and currency markets. It seems that bonds and currency traders have priced in continued uncertainty with a negative bias to future UK economic growth.