Overview
- Sarah Breeden, the Bank of England’s deputy governor for financial stability, told the BBC on Friday that risks are not fully priced and that markets will adjust at some point.
- Breeden highlighted private credit — loans made by funds outside traditional banks — which has swelled to about $2.5 trillion over 15 to 20 years and has never been tested at this scale.
- Major indexes remain near highs despite recent volatility linked to the Iran conflict, with the S&P 500 and Nasdaq hitting records earlier this week and the FTSE 100 trading close to its peak.
- The backdrop has tightened as UK consumer price inflation rose to 3.3% in March, driven mainly by higher motor fuel costs that lift household and business bills.
- Some investors say AI-driven earnings could support rich valuations, while the Bank of England stresses preparing the financial system for a potential drop that could dent pensions and make company borrowing harder.