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By Tyler Durden

Sterling drops, banking stocks tumble and peripheral EGB and credit spreads widen after the U.K.’s vote to leave the EU; verbal and direct intervention by central banks help currencies off earlier lows. U.K. PM David Cameron has resigned, announcing there needs to be a new prime minister in place by October.

MARKET MOVES: ALL ABOUT FX

• GBP/USD down ~8%, paring earlier slide of as much as 11%; liquidity returns as uncertainty dissipates with volumes around 50 times a “normal” session for the Asia time zone, traders in Europe say
• One-week implied volatility in GBP/USD up 2 vols; rose 21 vols to fresh record of 53.16% earlier
• USD/JPY briefly drops below 100 to a 2 1/2-yr low; CHF more than halves gains vs EUR after SNB intervened to stabilize the currency
• ZAR, PLN, MXN slide around 5%, leading declines among EM currencies
• WTI crude falls ~4% to $48.10
• FTSE 100 down 6%, Euro Stoxx 600 slumps 8.1%
• Yields on U.K. 10Y gilts drop 30bps to 1.07%
• Banking stocks RBS, Lloyds, Barclays shares fall more than 29%

WHAT’S THE LATEST?

• U.K. PM Cameron says will continue in role for three months, says the next PM will decide when to trigger article 50
• Central banks across the world pledge to take action as needed to avert any breakdown in financial-market liquidity
  • Governor Carney says BOE well-prepared for Brexit, ready provide GBP250b of extra funds; adds central bank won’t hesitate to take additional measures
  • SNB says it “intervened in the foreign exchange market to stabilize the situation and will remain active in that market”
  • BOJ Governor Kuroda and Japan FinMin Taro Aso said central banks of six major developed nations have currency-swap lines at the ready to provide liquidity
• Central banks expected to ensure stability on Brexit impact, with BOJ expected to act more rapidly than others, UBS economist John Wraith says
• As first step, possibly there will be some verbal communication in form of “whatever it takes” to reassure the markets; then some reassessment will be required, UniCredit strategist Vasileios Gkionakis says
• BOJ likely to step in on a dip in USD/JPY below 100
• S&P says U.K. will be downgraded by at least one notch; says votes in Scotland and Northern Ireland ‘raise many questions’
• U.K.’s credit ratings would be quickly reviewed, “likely with a negative bias,” Andrew Colquhoun, head of Asia- Pacific Sovereigns at Fitch Ratings said before the vote result
• EU President Donald Tusk says EU determined to keep unity as 27-member bloc
• Brexit means U.K. can’t retain advantages of being in EU, French government spokesman Stephane Le Foll says on France2 TV
• There must be a referendum now in France, National Front party says in posting on Twitter, while Dutch Freedom Party Leader Wilders says “Time for Dutch referendum”
• JPMorgan executives say may need to change location of some roles, will maintain large presence in U.K.

WHAT HAPPENS NEXT?

• Govt paper on the process of withdrawing from the EU shows U.K. and union members will have 2 years to negotiate initially; period can be extended if all remaining 27 members agree
• “The EU procedures for leaving the European Union are clearly spelled out and will …read more

  Source: Brexit: All The Latest News, What Happens Next And How To Trade It

      

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  Posted June 24th, 2016 in Uncategorized.