Market's vision of Brexit is too rosy

Britain's Prime Minister Theresa May leaves 10 Downing Street in London, March 29, 2017. REUTERS

The Breakingviews index incorporates currency, bond, stock, and credit default swap prices. It falls when investors think a growth-damaging “hard Brexit” is more likely, and rises when they expect a more benign outcome. 

When the former occurs, sterling typically weakens and the domestically-focused FTSE 250 Index of mid-cap companies tends to underperform the FTSE 100 Index of blue-chips, which has a more international bias.