+ 2.31
+ 0.66%
+ 3.33
+ 0.98%
+ 2.65
+ 0.63%
+ 0.51
+ 0.36%
+ 0.16
+ 0.1%

What Goldman Sachs Thinks Of The Brexit

June 24, 2016 9:46 am
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More

Britain’s surprise vote to exit the Eurozone sent global financial markets crashing on Friday, and traders are now left wondering how the Brexit will play out in the long run. According to Goldman Sachs analyst Peter Oppenheimer, Europe and the U.K. now face a future of significantly weaker growth.

“While central banks will act quickly to maintain market functioning, we judge the likely implications for market pricing to be large, broad-based and rapid,” Oppenheimer explains.

Goldman expects that central banks, including the Bank of England, will step in and perform whatever measures are necessary in the short-term to keep markets stable.

Related Link: Brexit: Cameron Resigns, European Stocks Tank And Pound Hits 30-Year Low

Goldman sees major weakness for the Sterling and the Euro and strength in “safe haven” currencies like the U.S. dollar, the Franc and the Yen. In the wake of the Brexit vote, the Sterling has already hit a new 30-year low.

Goldman predicts German bund yields could fall to -0.15 percent while U.S. Treasury yields could spike to 1.35 percent.

Traders looking to trade Goldman’s theses should consider buying the iShares Barclays 20+ Yr Treas.Bond (ETF) (NASDAQ: TLT) and the PowerShares DB US Dollar Index Bullish (NYSE: UUP) and selling the iShares Trust (NYSE: EWU) and the iShares MSCI EMU Index (ETF) (NYSE: EZU).

Disclosure: the author holds no position in the stocks mentioned.

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to our YouTube channel.

Related Articles

Brexit Trade Talks In Deadlock, 'Progress Remains Limited'

The United Kingdom and European Union Brexit trade talks are in a deadlock, with both sides criticizing each other's negotiation stance. read more

Brexit Update: Coronavirus Creates Further Uncertainty Over UK Trade Agreement

The United Kingdom is meeting for the fourth round of Brexit negotiations between London and Brussels Tuesday, as a comprehensive trade deal to replace the transition phase by the end of this year kicks off. read more

Germany Avoids Technical Recession, Eurozone GDP Projected To Rise 0.5% In 2020

UK PM Johnson Battles To Push Brexit Deal Through