A Week After The Referendum In Britain, Global Currencies Are All Affected.

A week after the referendum, global risk assets and risk aversion assets rose simultaneously.

Analysts believe that the dramatic change is rooted in the market's new round of loose expectations of the global central bank, but the market is too optimistic, and global monetary easing is difficult to sustain. The rise in risky asset prices last week may be foreshadowing for future turmoil.

After the British referendum, the risk assets fell sharply, and the British stock market hit a 10% decline. Germany, France, the United States, Japan and other developed economies also fell by more than 5%, while crude, copper and other bulk commodities suffered a setback.

At the same time, the risk assets and the gold were favored. The German ten year treasury bond negative rate continued to expand, and the US 10 year treasury bond yield also hit a new low. Gold prices once increased nearly 8%.

But then, as a risky asset, the stock market recovered, and crude and copper commodities returned to the rally.

State Securities (600109) analyst Xu Yang believes that the United Kingdom from Europe triggered the global

Loose monetary expectations are the main reason for the overall rise in asset prices.

The governor of the Bank of England has made clear or implemented loose measures in the summer to cope with the tight financial environment that may be brought to Europe.

In the past two weeks, the market also agreed that the Bank of England will soon raise interest rates.

In addition, Japan's low inflation and the sharp appreciation of the Japanese yen overlay the uncertainty brought by Britain's departure from Europe, which may make the Bank of Japan more relaxed in its July meeting.

The weakening of China's endogenous growth kinetic energy also makes the domestic currency loose expectations warming.

More importantly, after the referendum was removed from Europe, the market cooled sharply on the Fed's interest rate hike, and the asset price was fully boosted.

However, global monetary easing may be difficult to sustain.

Xu Yang believes that, first of all, the market is too optimistic about loose monetary expectations.

Fisher, vice chairman of the Federal Reserve, made clear that Britain's influence on the US economy may be smaller than that of other countries, and the Fed did not implement the negative interest rate plan.

Federal Reserve's 2017 annual vote Committee, MST, also said that raising interest rates too long would increase the risk of financial stability.

The European Central Bank's loose internal differences still exist, and Germany strongly opposes it.

For China, the depreciation of the RMB will restrict the easing of the central bank.

The RMB exchange rate has reached the lowest level at the end of the year. If the central bank further loosens or derogate to the expected temperature, it will trigger a new round of capital flight, which will endanger the systemic security of China's financial market.

Secondly, the marginal effect of monetary easing is decreasing, and continuing easing may also cause global stagnation.

As the Bank of England joined the "helicopter money" ranks, global commodity prices rose again, increasing inflation expectations.

But correspondingly, demand is still in the doldrums, the rise of uncertainty in Britain and the aggravation of the negative impact of trade cuts on the economy will bring about a slowdown in global economic growth.

Inflation expectations are rising, slowing the growth of the economy, or plunge the world into stagflation.

Xie Yaxuan, chief macroeconomic analyst at China Merchants Securities (600999) research and development center, said that asset price inflation promoted by monetary easing has strong bubble attributes.

In the context of prolonged economic stagnation, the global market will face strong shocks once the liquidity tide recede.

The US monetary policy is still in the interest rate cycle, and the global loose expectation will eventually end with the second increase in interest rates expected by the Federal Reserve.

In the first two months of this year, the turmoil in the global market is just around the corner. The rising risk asset prices of last week may be laying the groundwork for future turmoil.

Xu Yang also believes that as the market gradually revised the loose expectations of the central bank, the price of risky assets will return to fundamentals.

Insufficient demand and overcapacity will return to investors' perspective.

The rise of trade barriers caused by the euro referendum and the rise of uncertainty will suppress the risk assets through trade channels and market sentiment.

At the same time, the rise of European separatist sentiment caused by the euro referendum brought about.

Uncertainty heating up, superposition of the US election in the second half of the year and turbulence in Brazil's political arena will lift the risk aversion of the market, thereby supporting the risk asset prices.