Initial Guidance | 28 June 2016

Brexit uncertainty continued to weigh on stock markets yesterday. Stratfor, a geopolitical consultancy, advises that the UK vote to leave the European Union may signal the start of a post-globalization world. Reva Goujon, a Stratfor analyst, writes that “global trade growth has been in structural decline since the Great Recession.”

The Fed should cut interest rates at next month’s FOMC meeting, writes Narayana Kocherlakota, a former president of the Federal Reserve Bank of Minneapolis. “Britain’s vote to exit the European Union and the reaction in global markets offer important lessons for the Federal Reserve. It should be easing policy in the near term.”

The US Services PMI inched higher in the revised data for June, but “growth remains subdued” for the sector and “employment expanded at the “slowest pace for a year-and-a-half,” Markit Economics reports.

The Dallas Fed Manufacturing Index remained negative in June, despite the recent rise in oil prices. “Oil and gas is driving this bus,” according to 24/7 Wall St. “Frankly, economic readings in the Texas region are likely to remain subdued in the months ahead if oil prices remain anywhere close to the levels that they are now.”