On Thursday, citizens of the United Kingdom took to the polls and voted to leave the European Union. Not surprisingly, asset prices across the financial markets reacted violently as risk-off flows dominated the trading sessions. The S&P 500 dropped -3.39%, US 10 yr rallied with the yield falling to 1.56%, gold and the US dollar also rallied strong. The British pound and Japanese yen were pinned against each other in the GBP/JPY forex pair, where the results were even more spectacular. The currency pair plunged to a new 3 1/2 year low.
The Brexit has unleashed a potential stress in the global financial system, resulting in concerns from the US Federal Reserve and central banks from around the world. The implied probability of a Fed rate hike any time this year has subsided dramatically. Barclays and Royal Bank of Scotland fell
-20% and -27% respectively. Deutsche Bank fell -17% and Credit Suisse -16%, also global systemically important banks suffered deep sell-offs.
As the Brexit outcome continues to be analyzed, the markets should continue to show a high degree of volatility as institutional positioning going forward begin to be determined. I will pay special attention to the banking sector and correlations to identify institutional activity and therefore trading opportunities.
Join us this week and experience the power of market intelligence. We will be show casing the new Einstein SmartBox automated trading system with cross-market relationships and correlations analytics.
Joe Rios
The Trading Room® TradeLAB – Global Trading with Quantitative Technologies
Join our trading community with RiosQuant founder and trade coach Joe Rios as well as the RQ members.
Live demonstration of our pre-market quantitative analysis, real-time trading signals with RQ algorithmic technology, strategy performance review and Q&A session.
Monday thru Friday – From 8:00 am to 11:00 am ET
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The Insider’s Quant (I.Q.) Room
Monday – 12:30
Forecasting
Wednesday – 12:30 pm
Event Driven Trading: Brexit
Friday – 11:30 pm
Insider’s Round Table Meetup
