"Following the sharp sell-off after the Brexit vote, markets have rallied this week. Equities, EM, EUR and GBP are up; vol, JPY and USD down.

In our view, the market rally reflects in part the realization that Brexit is more a UK than a global shock and expectations that it will allow central banks to be dovish.

However, in our view, it also reflects hopes that the UK may not activate Art. 50. We are sympathetic to the former, but concerned about the latter. Backtracking from Brexit requires too many "ifs": deep recession, soon enough, changing the public view on the EU, and making it politically popular to ignore the referendum.

We like selling GBP and EUR rallies, but would be constructive on risk assets if NFP data improves next week".