Financial Stability Report, July 2026 (Bank of England)

Summary

• Oil prices fluctuated around the $100 per barrel level for several months after the Middle East conflict began, against an average of around $68 per barrel over the previous decade.p.12
• The FPC has maintained the UK countercyclical capital buffer rate at its neutral setting of 2%.p.10
• Hedge funds' equity prime brokerage balances have increased by around 40% over the past year, to record levels.p.18
• Within the S&P 500, AI companies now account for around half of the index, up from around a quarter in 2022.p.23
• The five AI hyperscalers accounted for just 3% of outstanding US investment-grade debt at the end of 2025 but over 15% of year-to-date issuance as of early May.p.28
• AI issuers accounted for 41% of non-refinance-related US high-yield issuance this year, despite only 1% of the JP Morgan HY bond index at the end of 2025.p.29
• The OECD estimated that the share of private credit financing AI investment increased from 9% in 2024 to 34% in 2025.p.29

Key insights

1. The Philadelphia Semiconductor Index is up 97% since the start of the year, and the S&P 500 and FTSE 100 have both risen around 10% since the December FSR.p.17
2. In the United States, the share of credit card accounts in arrears has risen to around 13% in 2026 Q1.p.14
3. Total levered equity ETF holdings are around $200 billion in the United States, versus around $15 trillion in unlevered equity ETFs.p.19
4. The S&P 500 accounts for around half of global equity capitalisation.p.23
5. Barclays projects $240 billion of the AI hyperscalers' 2026 investment needs will be financed through investment-grade credit issuance, versus $150-170 billion of senior debt typically issued per year by the big six US banks.p.28
6. The IMF estimates that price-sensitive investors now hold at least half of US, Japanese, euro area and UK sovereign debt.p.16
7. Hyperscaler bond issuance in the first half of 2026 has already exceeded 2025 issuance.p.28