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(Bloomberg) -- Opinion polls show as many as 1 in 3 voters are undecided about whether they will vote to leave or stay in the European Union at the June referendum, spurring debate about what a low turnout would mean for the result and for the pound.

• NOTE: Implied-realized GBP/USD vol spread on the 3-month tenor rose to a record on Thursday, as voters in the Netherlands used a referendum on a treaty between the European Union and Ukraine to rebuke Dutch and EU leaders
• Developments that could impact sterling in coming months are surveys on voting intentions, the selection of the official “in” and “out” campaign groups, the refugee crisis and political developments in the EU

• WHAT’S THE LATEST?
• Prime Minister David Cameron says he hopes the Dutch result won’t affect the U.K. referendum, in a speech targeted at encouraging younger people to vote
  • He said last month the result is on a knife edge and could be decided on who bothers to vote; political campaign organizer Lynton Crosby says those in the “leave” camp are still more likely to actually cast a vote
• Most recent polls show the two camps are virtually neck and neck; telephone polls, deemed to be more accurate, at the end of March showed the remain camp’s lead had narrowed
• The turnout at the Dutch referendum was just 32%; if the turnout were anywhere near that low in the U.K. vote, it would raise the possibility of a U.K. exit Nomura analyst Philip Rush writes in client note
• Meanwhile, JPMorgan’s Allan Monks says this risk may be overdone as interest in the Brexit debate looks high relative to past referendums and elections, according March 4 note
  • Uncertainty over jobs and economic stability, versus attitudes toward migration and security are the two factors that will impact the result, Monks adds
• Cameron’s GBP9.3m plan to send a leaflet “to set out the facts” on the referendum to every U.K. household was attacked as “propaganda" by Justice Secretary Michael Gove, one of the leading campaigners for a U.K. exit
• The BOE said last month uncertainty over the U.K. referendum may hold back investment and growth, though MPC member Kristin Forbes said there’s not yet enough data to estimate impact
• The U.K. current-account deficit surged to 7% of GDP in 4Q, before the referendum date was known, and adds to concern a vote to leave could see a sharp slowdown in investor inflows
• Standard Chartered analyst Eimar Daly says uncertainty is leading to reduced foreign inflows, with M&A deal announcement values down sharply since December 2015

• WHAT’S NEXT?
• The Electoral Commission’s deadline to determine the official ‘‘leave” and “remain” campaigns is April 14, and referendum period starts the day after; the decision gives the lead campaign groups higher spending limits
• JPMorgan says a successful implementation of an EU deal with Turkey to stem migration flow would lower the likelihood of “Brexit”
• UBS Wealth Management analyst Ricardo Garcia says if the EU- Turkey deal leads to lower migrant inflows, that will be more important in voter minds than last month’s terror attacks in Brussels
  • Once the campaign starts formally and Cameron campaigns more pro-actively, it will be important to see if the undecideds make up their minds and which campaign they back; expect most to favor staying in the EU, Garcia adds

• WHAT’S THE LIKELY REFERENDUM OUTCOME?
• Polls show the “remain” and “leave” campaigns fairly balanced; undecideds range from 16% and 28% in surveys since end-Feb.
• RBC says betting markets are a better gauge of implied probabilities; in recent days, these have shown a jump in the probability of a vote to leave toward its peak of ~40%
• Betting odds website oddscheker.com shows 69% support for U.K. staying in EU
• UBS WM sees a ~30% chance of Brexit; Citigroup puts the likelihood at 30%-40%; IHS sees 35%-40% chance of an exit

• WHAT HAPPENS IF THE REMAIN CAMP WINS?
• The vote may spur persistent political and economic uncertainties that may not end even if U.K. votes to stay, Citigroup says
• Even if the U.K. votes to remain in the EU, divisions resulting from the referendum could lead to early elections, according to Morgan Stanley analysts
  • The bank’s economists say even if the “remain” camp wins, slower growth and weaker inflation would push the first BOE rate increase back to early 2017
• Meanwhile, ING analysts say if the U.K. votes against “Brexit,” the BOE could lift rates as soon as November
• BNY Mellon analysts note GBP strength after the Scottish referendum faded just hours after the result; Morgan Stanley says sterling could recover slightly but won’t retrace all of its losses since mid-2015
• Julius Baer analysts see asymmetrical downside risks for sterling, believing a long-lasting relief rally is unlikely in case of a vote to stay

• WHAT HAPPENS ON A BREXIT?
• EU provisions suggest negotiations can take up to two years but some commentators say that period could be extended, if needed
• In the worst case, the economy would be 3.9% smaller by 2030 compared with staying in the bloc and GBP21.1b of business investment would be lost, Oxford Economics says, adding that best case sees a loss of 0.1% in GDP
• Analyst estimates for GBP declines from Barclays to HSBC range from 10% to 20%
• Citigroup rates strategists say the sharp fall in sterling and the likelihood of a rapid uplift in inflation could stay the central bank’s hand
• British manufacturers, retailers and universities may see their credit ratings slide if the U.K. votes to leave: Moody’s
• Fund managers Aberdeen, Henderson face the largest operational risks in a “Brexit,” scenario, according to UBS equity analysts; U.K. retail sector may de-rate, the bank says
• A vote for an exit will spawn the deepest European HY market slump since the Greek debt crisis, analysts and investors say
• A U.K. exit would have wide-ranging negative economic consequences beyond the country; would most likely include a euro-area recession, something that doesn’t yet appear to be priced in G-10 FX vol curves, Credit Suisse economists say
• Any market turmoil after a vote to leave could also stop Fed rate increases, UBS Wealth Management global CIO Mark Haefele says in interview

• HOW TO TRADE IT?
• Investors should brace for a more than 4% drop in sterling in the referendum run-up, according to Validus, the most accurate GBP forecaster in 1Q
• Nomura stays short GBP vs USD with a 1.40 digital put expiring just before the referendum; doesn’t look to add to exposure unless there’s a squeeze higher to 1.44-1.45
• An escalation of the Greece situation, alongside the U.K. referendum, could drive peripheral spreads wider, weigh on EUR and increase the currency’s volatility, Barclays analysts write
• HSBC says long CHF is the best hedge against the risk of Brexit
• TD Securities, ING favor Dec 16/Dec 17 short-sterling steepeners, with TD saying market pricing of a BOE rate increase is too extreme
• Citigroup analyst Jamie Searle agrees the U.K. front end is too rich and that will likely reverse, whatever the result in June; paying the front-end outright or cross market is a good hedge, though it’s still too early, he adds
• If the U.K. were to vote to leave, gilts wouldn’t be on the top of investors’ list of British assets to sell, Newton’s Howard Cunningham says in interview; he favors linkers, which could find support whatever the outcome
  • Aviva Investors agrees, saying the outlook for gilts isn’t clear as U.K. govt debt could benefit from domestic haven flows, even as they suffer from international outflows
• “Brexit” risks and increased ECB purchases support long- end EUR rates; recommend buying EUR 10s30s conditional bull- flatteners with 1-mo. expiry, SocGen says
• Barclays recommends U.K. stocks with dollar exposure, FTSE 100 companies and consumer staples

(Bloomberg) -- “Bond King” Bill Gross says the Federal Reserve must raise interest rates because savers would be “destroyed” if rates turn negative, according to an interview with the Janus Capital Management fund manager in the cover story of the April 11 issue. Without savers, who Gross says are the “bedrock of capitalism,” there isn’t investment or growth. Key takeaways:

• Fed will raise interest rates this year, either once or twice to 1% fed-funds rate by year-end

• Fed must move gradually in normalizing interest rates over a period of two to four years, with normalization targets for 2% fed-funds rate, 3.5% 10-year Treasury yield, 4.5% mortgage rate

• U.S. economy is growing very slowly but isn’t facing a recession

• Suggests asset managers can profit more from trading Treasury calls and puts than investing directly in central- bank notes

• Cites Nuveen Preferred Income Opportunities (JPC), Duff & Phelps Global Utility Income (DPG), Annaly Capital Management (NLY) and American Capital Agency (AGNC) as investment picks

Other highlights from this week’s magazine (subscription required):

• Walt Disney (DIS) at $96 “holds even more appeal” after the abrupt exit of Tom Staggs as chief operating officer this week since problems created by the departure “seem manageable,” Barron’s reported. Disney’s operating challenges are the envy of other companies: While subscribers could slip away from its cable networks such as ESPN, operating profit in Disney’s cable business is expected to grow by mid-single digits through 2019. Barron’s recommended the stock at $110 in a May 2015 cover story.

• Apple (AAPL) shares could be $150 in a year, creating a return of 40% including dividends, Barron’s said. Reports from Credit Suisse analyst Kulbinder Garcha and Needham’s Laura Martin show that Apple stock should rise either because of its ability to increase profits from services or by applying the high valuations given to cable companies.

• Toll Brothers (TOL) could gain about 40% if investors realize it’s not as exposed to the weakness of the Manhattan real-estate market as some market participants think, Barron’s said. Deutsche Bank analyst Nishu Sood wrote earlier this year that “fears are overstated” about its exposure, while CEO Douglas Yearley said New York is “still a very good market.”

• Seagate Technology (STX) shares offer an enticing dividend yield of 7.6% even though the outlook for the company’s product line of hard disk drives and other data storage is lukewarm, Barron’s said. John Petrides, a portfolio manager at Point View Management, which holds Seagate shares, is confident that the company will continue paying its dividend and could rise 15% in a year.

• Owens-Illinois (OI) could rise at least 25% in the next 18 months if it’s able to execute on operational improvements and revive growth in its business of making glass containers for food and beverages, Barron’s reported. The company plans to slash costs at facilities, streamline its supply chain and rebuild aging furnaces. Barron’s says its call in April 2015 for a 25% rally didn’t materialize, and the stock fell about 30% since then.

• Carrefour (CA FP) could rise 20% if the French retailer can win over critics of its growth prospects, Barron’s said. Its challenges arise from consumers purchasing lower-margin food products rather than more profitable non-food items, as well as declining profit margins in Asia. But its new strategy of serving customers through convenience stores along with its hypermarkets and its past decisions to enter emerging markets early offer upside.

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