Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
These are difficult times for the UK economy, with Brexit unresolved, the eurozone struggling, the global economy slowing and trade tensions on a knife-edge.
So the Bank of England’s latest financial stability report, released this morning, will show whether policymakers are getting more anxious that the next financial crisis is looming
The report will assess the stability of the UK financial system, and outline what the Bank is doing to remove or reduce any risks to it. The BoE will also release its Systemic Risk Survey Results, showing what investors are particularly worried about.
This is the final risk assessment before 31 October, the current Brexit date, so investors will be keen to hear the Bank’s views.
Mark Carney will face a grilling from the press at 11am. UK issues will obviously dominate, but the BoE governor may also be asked about his own prospects — is he hoping to replace Christine Lagarde at the head of the International Monetary Fund?
Traders, meanwhile, are pushing asset prices higher as they anticipate a US interest rate cut later this month.
Yesterday, Federal Reserve chair Jerome Powell told Congress that America’s economy was suffering from a weakening global economy and rising trade tensions, a cue that policymakers will ease conditions soon.
Ipek Ozkardeskaya, analyst at London Capital Group, explains:
The US dollar gave back gains on a sharp move after the Federal Reserve (Fed) Governor Jerome Powell has been very clear that the global economic slowdown outweighs the encouraging data in the US at his speech before the congress on Wednesday.
Powell’s testimony gave yet another solid sign that the Fed is preparing to cut the interest rates in July. In the wake of Powell’s first day of testimony, the market sees a 25-basis-point cut as largely granted
That weakened the dollar, and drove Wall Street to a record high last night.
European stock markets are expected to rise this morning, pushing Britain’s FTSE 100 towards an 11-month high.
Powell is back on Capitol Hill later today to take questions from the Senate, so could double-down on his dovish message. We also get new US inflation and unemployment data.
- 10.30am BST: Bank of England publishes financial stability report
- 11am BST: BoE press conference with Mark Carney
- 1.30pm BST: US consumer inflation data for June (expected to drop to 1.6% y/y from 1.8%)
- 1.30pm BST: US initial jobless claims figures for last week
- 3pm BST: Fed chair Jerome Powell testifies