The US Federal Reserve plans to unveil proposals next week that would modestly ease capital requirements for US banks by revising Basel III rules and adjusting surcharges for the largest lenders. Regulators say the changes aim to better align capital buffers with actual risk and encourage lending, though the proposals will face public consultation before finalization.

Economists expect the European Central Bank to keep interest rates unchanged through 2027, despite resurging inflation threats, according to a Bloomberg survey. The survey reveals that only 7% of respondents anticipate a rate move by December, with less than a third expecting any tightening by the end of next year.

UK economic growth stagnated in January, with zero growth reported by the UK Office for National Statistics, falling short of economists' expectations of 0.2%. The services sector showed no growth, and production contracted by 0.1%, although construction saw a 0.2% increase. The surge in oil and gas prices poses a risk to the economy, potentially keeping inflation around 3%. The Bank of England is expected to maintain interest rates at 3.75% in response to persistent inflation.

UK Chancellor Rachel Reeves is set to advocate for greater UK access to the EU single market in her Mais Economic Lecture, aiming to strengthen ties as part of a new growth strategy. However, Reeves faces resistance from European capitals, with concerns about sector-by-sector re-engagement and expectations for the UK to contribute to the EU budget.

Hong Kong Exchanges & Clearing Limited has proposed lowering the market capitalisation threshold for dual-class shares to $767 million from $1.3 billion and the revenue requirement to $77 million from $128 million. The move is part of a broader effort to revive Hong Kong's status as a premier destination for IPOs, particularly for large Chinese enterprises amid geopolitical tensions. The proposal also includes expanding eligibility for innovative business models and allowing confidential listing applications.

US banks are optimistic that the upcoming revised Basel III Endgame proposal will allow cross-product netting for capital purposes, particularly for portfolios including US Treasury repos and other interest rate products. The previous version of the rules would have prevented this, potentially raising capital requirements. The US Securities and Exchange Commission's mandate for Treasury repo clearing, which takes effect in 2027, is expected to increase clearing volumes, making margin and capital efficiency crucial.

US Securities and Exchange Commission Chair Paul Atkins has suggested an "innovation exemption" to facilitate limited trading of certain tokenized securities, aiming to develop a long-term regulatory framework. Atkins emphasizes the need for rationalizing corporate reporting rules to achieve the "minimum effective dose of regulation."

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