Relief for financial market after a rather positive speech from the British Prime Minister on Brexit
23 January 2017
After a quiet Monday (Martin Luther King Day, bank holiday in the US), the week started with the much expected Theresa May speech on Brexit on Tuesday.
Markets were very worried about it (overnight implied volatility was at a 5 month high) but in the end the tone was rather positive: “June the 23rd was not the moment Britain chose to step back from the world. It was the moment we chose to build a truly Global Britain.” Markets were relieved and GBP shot a nice 3% vs the dollar on the day.
The other major event this week was the European Central Bank meeting. Nobody expected anything from Mario Draghi… and we have not been surprised! The speech was very neutral and Q&A did not bring color about a potential tapering. Nonetheless, the move higher in bond yields that began on Tuesday carried on.
The last event this week is under way while I am writing. D. Trump’s speech will obviously be analyzed very thoroughly.