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Black Swans and Game Theory: A Post-Brexit Guide to Bond Trading

  • Judging political risk is increasingly important for investors
  • U.S. election, euro-region risks cloud the outlook for 2016
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Can U.K. Yields Go Lower in the Short Term?

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Bond investors are used to factoring things like economic growth and inflation into their models. They have less experience with politics, and these days political risk is crucial.

The immediate fallout of the U.K.’s stunning vote to leave the European Union has started to ease. But in conversations with investors, strategists and traders, one thing is clear: figuring out how to correctly price in what happens in the political arena has rarely been so important.