Remain standing: Brexit and the markets

Can financial markets sustain yesterday’s remarkable rally as the referendum on Britain’s EU membership draws closer? A weekend opinion poll showing the Remain side three points ahead fuelled hopes that Brexit could be avoided. The probability of a Leave vote fell to 22% on the gambling markets, having been 37% only a few days ago. The pound jumped against the dollar; London’s FTSE 100 index and other European equity markets rose by 3%. Bond yields rose as investors abandoned their “safe haven” charms, and the yield on the ten-year German bond is back in positive territory, having been negative last week. The scale of the rally suggests that markets might be very vulnerable to any polls showing the Leave side still ahead, not to mention the possibility that voters back Brexit on Thursday; the opinion polls were wrong about last year’s British general election, after all. (Source: The Economist)