- Dollar has risen, Treasury yields at record lows after vote
- U.S. central bank is in wait-and-see mode, Bullard says
Britain’s vote to leave the European Union, which has whipsawed markets and sparked political turmoil in the U.K., may end up having no impact on the U.S. economy, according to St. Louis Federal Reserve President James Bullard.
“The verdict so far is that Brexit will not have a big impact on the U.S., possibly zero,” Bullard said in a Bloomberg Television interview Friday with Francine Lacqua and Tom Keene. “There is some flight to the dollar, the dollar is a little bit stronger, but not enough to really have a big impact. Yields are lower. That’s usually considered a bullish factor for the U.S. Those two probably offset so you get to zero.”
Britain is facing months of uncertainty following the Brexit vote and Prime Minister David Cameron’s subsequent decision to resign. His successor won’t be chosen until September and there remains no clarity on what the future relationship with the EU -- Britain’s biggest trading partner -- will look like.
The Bloomberg Dollar Spot index, which tracks the U.S. currency against 10 major peers, has risen about 1.5 percent since the June 23 referendum, while the 10-year Treasury yield dropped to a record low 1.3784 percent on Friday as investors bet on slowing global growth.
“There is the issue of whether there will be further contagion to Europe but I don’t see that too far either,” Bullard said. “We’re definitely wait and see.”