Central Banks

Palisade Research's picture

Forget the politics.

Forget the impact on London's status as a global financial hub.

Forget the potential for independence referendums in Scotland and Northern Ireland.

Forget the future of the European Union.

 

Brexit is certain to have serious ramifications on all of these items, but it will take time for such sweeping changes to be agreed upon and implemented.

 

Following Brexit, Britain can take up to two years to leave the EU. Therefore changes across Europe are likely to take time to hammer out.

 

But there is one change that became readily apparent as a result of last night's vote and the chart we have prepared tells the entire story.

Here Comes Yellen: Fed Is "Monitoring" Financial Markets, Ready To Provide Liquidity With Swap Lines

The Federal Reserve is carefully monitoring developments in global financial markets, in cooperation with other central banks, following the results of the U.K. referendum on membership in the European Union. The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the U.S. economy.

G-7, Central Bank Governors, Christine Lagarde Issue More Statements To Calm Markets

Showing once again that the world's elite has not learned any lessons from the UK Brexit, instead of focusing on the core issue at hand, namely the deterioration of the living standards of the developed world's middle class, the world's political and financial elite is instead scrambling to calm down global markets, i.e., assuage the fears of the 1%.

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

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.

Central Bankers Around The Globle Scramble To Defend Markets: BOE Pledges $345BN; ECB, Others Promise Liquidity

There was a reason why we warned readers two days ago that "The World's Central Bankers Are Gathering At The BIS' Basel Tower Ahead Of The Brexit Result": simply enough, it was to facilitate an immediate response when a worst-cased Brexit vote hit. And that is precisely what has happened today in the aftermath of the historic British decision to exit the EU.  It started, as one would expect, with Mark Carney who said the Bank of England is ready to pump billions of pounds into the financial system as he stands at the front line of Britain’s defense against a Brexit-provoked market crisis.

"Don't Try To Be A Hero Today" Veteran Trader Warns "Self-Preservation Is Paramount"

With knife-catching "value" investors proclaiming yesterday that any dip today would be an opportunity, it appears once again that faced with the reality of Brexit blowback, no one (not even the central banks) are buying the f##king dip). As Bloomberg's Mark Cudmore exclaims "Don't be a hero," to those value-investors, warning that "most of the market is still in denial."