Panmure’s Simon French’s thoughts on today’s Financial Stability Report

Carney speaks at 1100 with the publication of the FPC’s July financial stability report. That strange hum you have been hearing from Threadneedle St in recent days has been the BoE shredder as it destroys the pre-Brexit version of the report. Expect the Governor to raise the spectre of liquidity windows for a broader range of institutions – this used to be banks and building societies and was extended in 2014 to CCPs and broker dealers.


Given the moves towards regulating and stress-testing asset managers then Carney could raise the spectre of providing the largest ones with access to the Bank’s Sterling Monetary Framework (the window). This would certainly lead to a bounce in the largest commercial property funds if they became eligible but it wouldn’t be enough to change my view that this is a sector to stay well clear of. There may be some wider commentary on the type of stress tests planned for H2 & some suggestion that the Bank may reverse its increase in the countercyclical buffer increase (to +0.5%) they instigated in December. I wouldn’t but given the government is in lame duck mode you may have Carney concluding he needs to do everything he can.



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