To sum up, Bank of England governor Mark Carney has warned in a Lords committee that leaving the EU could lead to lower economic growth.

He defended the Bank commenting on the referendum, saying it was its duty to weigh up the implications of Britain’s membership, but that did not mean it was getting involved in politics.

He said UK interest rates could get closer to zero, but said he had no appetite for negative rates.

He played down fears of a new round of complex financial instruments similar to those which caused the crash, but said the bank continued to monitor the risks.

[And not everything on the original topics for discussion appeared to come up.....]

And with that the session ends.

Q: How will you pursue climate change agenda [after Paris agreement]?

The most important aspect for the Bank is we are regulator of insurance, re-insurance sector. Climate change is one of most important things they have to manage, and they do it well.

As regulator, we have to make sure they are on top of it.

The bigger risk for financial system is the transition of regulatory environment to move to low carbon environment, and whether it is smooth or abrupt.

We will not tell banks to have larger capital requirements if you lend to a larger carbon emitter, we will not put price on carbon. But if there is a prospect of meeting Paris agreement, there will be an adjustment for businesses. The basis point is there needs to be a market in transitions, appropriate disclosure by companies what there strategy is and what their carbon footprint is.

Whatever your view, we are agnostic, but you can’t express those views across broader financial world because you don’t have the information

Q: How high could interest rates go without doing damage?

We do surveys on this. The good news is indebtedness is down. It would have an impact, it’s been a long time since interest rates have moved up. But the position has undoubtedly improved. And when banks are making mortgage decisions, they have affordability tests, including if interest rates go up.

Q: Any forward guidance on when we’ll hit 2%?

No. [laughs]

Q: On the housing market, lenders are edging up to higher loan to value lending, are you still concerned about housing market.

The indebtedness of British households has gone down but it still high. It is one of the major risks we watch at MPC, and we watch higher loan to value.

Q: what is the risk of house prices coming down in London.

We don’t look at housing prices, we look at indebtedness, says Carney. At the higher end [of the London housing market] there has been a move, in terms of negative interest [in property], which could feed through to prices.

But I [repeat] there is a degree of uncertainty ahead of EU vote.

On productivity Carney says a lack of confidence in future growth is an increasing drag on productivity and investment in the UK and other major countries.

Q: Are economic statistics fit for purpose?

I commend Charlie Beans review of ONS. It addresses a number of everyday issues where ONS could improve. We work closely with ONS.

The most interesting thing of the review is where it draws attention to the undermeasurement of the digital economy. 30 basis points of growth could be missed because of mismeasurement. One of the components of the report is to give ONS greater access to the data we have, subject to confidentiality.

Q: So is the CPI an accurate reflection of inflation?

We had concerns of move to CPIH, housing move, because we had concerns about rental market.

We have to continue to update the inflation basket, he says, but we do have confidence CPI is representative of inflation facing British households.

Q: Hasn’t QE caused some of these problems? Is there a danger you will move bubbles elsewhere?

This economy has needed monetary stimulus for some time, since the crisis, says Carney. The degree of stimulus has often been less than it appeared; relative to where interest rates needed to go, stimulus has been modest.

[With low interest rates] this is an environment where risk can build, in housing market, in infrastructure. We have to act to take out risk where we can.

On buy to let, we decided not to take additional action. Tax changes have been considerable, and we want to see how that plays out.

These risks build up, we have to be nimble about them.

Q: Before the crash banks were issuing very complex instruments. Are you concerned there are trillions of dollars worth of very similar instruments backed by corporate loans in last few years?

Instruments which were most problematic were securitisations of securitisations, Carney says. Single securitisation is a reasonable financial instrument

But any time something in finance grows rapidly, we should look at it. That’s why we are looking at buy to let because its growing rapidly.

Are you confident its not a repeat [of previous problems]?

More likely to relate to underlying creditworthiness of issuing entities.

Q: Your predecessor said regulation has become too complex. It has become enormous, what is your view.

UK is one of most advanced economies in world, a highly complex economy. This isn’t a simple world of barter and agrarian economies, and we shouldn’t go back to that.

Banks need to perform functions [which are complex]. The question with regulation whether we blend it with simpler cross checks and take out complexity where we can and with judgement [rather than box ticking].

Part of this process of addressing too complex to fail, is about making sure the institution itself is resolvable - ringfencing is one example.

Q: So does regulation make common sense?

The common sense elements are the decisive elements. There are some unhelpful and complex regulations, but we have to strip them out.

Q: are you saying London would be less dominant financial centre if we left the EU.

Depends on the negotiations, says Carney, but it is less likely London would remain as a pre-eminent financial centre [if UK left]. City of London unlikely to be enhanced [by Brexit].

Q: Do you agree with Chancellor that Brexit would lead to higher mortgages? Did he consult with Bank?

Chancellor did not consult, he is not a member of the MPC, says Carney.

There are scenarios where we could have lower GDP and higher inflation, which has implications in terms of higher bank rate, he says.

A second factor is bank funding costs, which are passed on to consumers. Risk premium could increase after vote, he says, which would increase funding costs. So two factors which could have an effect and point in the direction of higher mortgage rates.

Question: you said Chinese slowdown was greater risk to economy than EU referendum. Still agree?

Yes, in medium term the issues are considerable, it depends how they are handled by Chinese authorities.

Question: having a complicated financial system is inviting problems, but there is no real attempt to reduce complexity, is there?

There are a series of reforms that have sought to reduce complexity, including ringfencing banking, says Carney.

With Lehman and Bear Stearns it was not clear how they were linked, Carney indicates. Settling trades through central counterparties helps [with clarity].

On migration, Carney says that older workers staying longer in the workforce has swamped the effect of higher migration to the the UK. Net migration was likely to become more important as the effect of the increase in older workers is exhausted.

The effects of migration on wage levels are not material for the Bank of England.

More Carney on the uncertainties around the referendum:

We will comment on these risks when we have a policy meeting and they come up, but we will not comment through the purdah period of the EU referendum campaign.

A reminder: more on Carney’s EU comments in the politics live blog:

Carney says there is no intention for the Bank to provide a commentary on that or any other EU analysis.

Lord Hollick asks his view on Monday’s Treasury assessment. Carney says it is an analysis of a specific event rather than a Bank economic forecast. The Bank did not take part and it is up to the Treasury to discuss the analysis. But it is a sound analysis, the broad approach makes sense.

Carney:

Whatever the outcome of the Referendum, the MPC would use its tools to achieve its inflation remit, and, more broadly, the Bank’s policy committees will work in concert, as One Bank, to promote monetary and financial stability.

On the EU referendum, Carney says the Bank has not made and will not make any overall assessment of the economics of the UK’s membership of the EU. But he added:

At the same time, the Bank must assess the implications of the UK’s EU membership for our ability to achieve our core objectives of maintaining monetary and financial stability.

The Bank has a duty to report our evidence-based judgments to Parliament and to the public. That is the fundamental standard of an open and transparent central bank. Assessing and reporting major risks does not mean becoming involved in politics; rather it would be political to suppress important judgments which relate directly to the Bank’s remits and which influence our policy actions.

These policy actions include developing, and if necessary implementing, contingency plans. As with the Scottish Referendum, we will communicate as much as is prudent about those plans in advance of any risk materialising and as comprehensively as possible once risks have dissipated.

The Bank published a detailed, comprehensive report last year which reviewed the how EU membership affects the Bank of England’s ability to achieve its objectives.

And he added that there are risks:

Some elements of these risks may be beginning to manifest.

Since November, the trade-weighted value of sterling has fallen 10%, with more than half of that occurring since the MPC’s last forecast in February.

The cost of buying protection against a marked depreciation of sterling has risen notably, with sterling risk reversals falling to their lowest level in over a decade.

He added:

A vote to leave the EU might result in an extended period of uncertainty about the economic outlook, including about the prospects for export growth. This uncertainty would be likely to push down on demand in the short run.

Carney is talking about the housing market, and says growth in mortgage lending is driven solely by the buy to let market. He said:

Buy-to-let mortgages increased by 11.5% last year and now account for 17% of the stock of total secured lending, twice the proportion of a decade ago. The PRA has just reviewed the plans of the 31 top lenders in the industry, representing over 90% of total buy-to-let lending. The Review revealed that some banks were applying weaker standards and highlighted the risk that more might do so to meet aggressive growth plans. In response, the PRA has clarified its expectations for buy-to-let underwriting standards and introduced new guidelines for minimum stressed interest rates to be used when lenders test affordability.

Given the combination of this prudent reinforcement of underwriting standards and major tax changes now coming into force, the FPC has decided to take no further action at this stage but will continue to monitor potential threats to financial stability from buy-to-let.

The session is underway.

My colleague Andrew Sparrow will be following Bank of England governor Mark Carney’s comments on Brexit at the Lords committee in the politics live blog:

Carney’s appearance before the Lords can be seen live here.

Gold and silver continue to gain ground, mainly driven by a weak dollar and Chinese buying.

Gold is up 2% to a one week high of $1255 an ounce while silver - the main beneficiary of Chinese demand - has jumped 5% to a ten month high of $17.07 an ounce.

US housing has been one of the stronger areas of the economy, so a downturn in March raises some questions, says Rob Carnell of ING:

With talk of recession in the US economy beginning to gain traction again ahead of what will probably be a very weak first quarter GDP release next week (just after the April Federal Reserve Open Markets Committee meeting), we are looking for evidence on either side of the argument to help us update our forecasts and confirm or deny the recession argument.

We feel the evidence for recession is quite circumstantial, with both weak and strong patches within the US economy. But one of those stronger patches has been the US home building sector, and this has taken a big dent in March.

Housing starts fell by 8.8% month on month in March, with permits falling 7.7% month on month. Both single family and multifamily home starts were down sharply, though thanks to strong growth in January and February, this will merely dampen the boost to first quarter GDP growth from residential construction, not overturn it.

But with permits providing a forward indication for weak second quarter residential construction, our conviction that what we are seeing is just one of the usual soft-patches in US data, not anything more alarming, is coming under pressure.

We have been consistently below the recently cut consensus forecasts for US GDP growth (2.0% for 2016) and remain so even now (ING forcast 1.9%for 2016). But the likelihood of a really weak first quarter 2016 GDP forecast means that we will almost inevitably have to trim our figures further. Something closer to 1.5% for the full-year would be more consistent with the sorts of numbers published for first quarter GDP by the NowCasters, even assuming a recovery to the 2-2.5% range for the rest of the year.

Argentina is about to make a triumphant return to the bond markets, 15 years after defaulting on its debts.

After being swamped with interest, Buenos Aires has bumped up its new sale of three, five, 10 and 30-year bonds.

It initially planned to raise $15bn, but is now going to sell $16.5bn of debt after receiving $65bn of bids from investors hungry for returns.

It’s a victory for Argentine President Mauricio Macri, who has worked hard to reach a deal with the country’s lenders - such as vulture funds who bought Argentinian debt after its defaulted.

Cutting a deal with such predatory investors can’t be pleasant, but it does allow Argentina to borrow from the markets again.

Mihir Kapadia, CEO at Sun Global Investment, argues it’s an important development:

“The success of the issue is seen as an endorsement of new president Macri, as it is a huge step forwards with regards to improving Argentina’s financial credibility.”

Oh dear. The number of new US house-building projects fell by almost 9% in March, new data shows.

Residential housing starts decreased 8.8% to an annual rate of 1.09 million, the lowest since October, according to the Commerce Department.

And the number of permits to build a new house also fell, by almost 8%, suggesting America’s construction sector suffered falling demand last month.

Traders are selling the US dollar as a result, on the grounds that an early US interest rate rise is less likely.

The last three months certainly weren’t a vintage quarter for Goldman Sachs:

This is the fourth consecutive quarterly fall in Goldman’s profits, as its bond traders and investment bankers suffer from tough market conditions.

Here’s some instant reaction to Goldman Sachs’ big fall in revenues and profits in the last quarter.

https://twitter.com/MattCampbel/status/722390203634159616

Global stock markets have hit their highest level since last December.

The rally in Europe and Asia today, and on Wall Street last night, has pushed MSCI’s All-Country World Stocks index to a four-month high.

It’s gained around 12% since early February, when investors were panicking about the slowdown in China and the stability of some European banks. Quite a turnaround, and vindication for those commentators who argued that shareholders should sit tight.

The European Commission is gearing up to hit Google with fresh anti-competitive charges, over its Android mobile phone operating system, it appears.

The word in Brussels is that European Competition Commissioner Margrethe Vestager could unveil formal antitrust charges on Wednesday. She’s likely to accuse Google of abusing Android’s dominance to give its own apps an unfair advantage against rivals.

The case could echo the clashes with Microsoft more than a decade ago, when Brussels took issue with the software giant’s domination of the desktop PC business.

The German stock market is roaring ahead today, jumping by 220 point or 2.2%.

Traders in Frankfurt were spurred into action by this morning’s ZEW index, showing a leap in German economic confidence.

German manufacturers are leading the rally, such as skincarer maker Beiersdorf (+3.8%), chipmaker Infineon Technologies (+3.3%), and chemicals firm BASF (+2.6%).

And Europe’s rally is likely to feed through to New York in a few hours time, potentially pushing the Dow Jones index to a new nine-month high.

Connor Campbell of SpreadEx sums up the morning:

Doha what? After Monday’s rather tentative trading following the lack of oil action over the weekend the markets have leapt into life this Tuesday, hitting a bevy of fresh highs in the process.

The main thrust of the morning’s growth came from the Eurozone, the catalyst for this surge being the day’s ZEW economic sentiment figures. With the German number coming in at 11.2 (against 8.2 expected and 4.3 last month) and the region-wide data at 21.5 (vastly higher than the 13.9 forecast and the 10.6 seen last month) confidence is picking up, despite the very real threat of a Brexit AND a worsening assessment of the German economy. This was the green light the DAX needed to roar in to life, jumping by over 200 points to 10350, within a 150 leap away from a fresh 2016 peak.

Niels Christensen, foreign exchange strategist at Nordea, says the recovery in oil has sent confidence gushing through the markets:

He says (via Reuters)

“It is quite amazing how oil prices have recovered from Monday’s lows. That is shoring up risk appetite and pushing up commodity-linked currencies.

“As long as oil remains above $43 a barrel we think commodity currencies will remain supported.”

Brent is currently trading at $43.24 per barrel....

The workers’ strike that has halved Kuwait’s oil output looks terribly civilised, judging by these photos from Sunday:

The oil workers are protesting against cuts to pay and benefits, which Kuwait is enforcing after the slump in oil revenues played havoc with its budget.

The Kuwaiti government has urged workers to return to duty, and threatened legal action against the “instigators” of the walkout.

But analysts predict that a compromise will be found.

Consultancy group Eurasia says:

“Sensitive to union pressure, the government is likely to compromise on most of striking oil workers’ pay demands.

In the coming days oil production is likely to partially recover from its initial drop as non-striking staff is redistributed and inventories drawn upon.

Two of Europe’s better known lager brands are changing hands, as part of the latest mega-deal in the brewing industry.

Budweiser brewer Anheuser-Busch InBev is selling Peroni and Grolsch to Japan’s Asahi (the firm behind Super Dry beer), to help smooth its takeover of SAB Miller.

London craft brewer Meantime is also being sold to Asahi, less than a year after SAB snapped up the fast-growing company...

More here:

The FTSE 100 has just hit its highest level of the year, up 42 points at 6395.

Precious metal prices are rising this morning too.

Gold has gained 1% to $1,246 per ounce, while silver has jumped by 3% to a 10-month high.

Again, that’s partly due to the weakening US dollar. It has lost ground against most commodity-linked currencies today, reflecting the recovery in the oil price.

European stock markets are rising at the start of trading, following Asia’s lead.

In London the FTSE 100 has gained 23 points, or 0.4%, to 6377 points.

Mining stocks are packing the list of top risers, with Anglo American up 4% and Fresnillo and Glencore both gaining 3%.

That’s partly because the US dollar is weaker this morning, which pushes up commodity prices.

Investors are also welcoming today’s recovery in the oil price, as Kit Juckes of French bank Société Générale explains:

Brent crude at $40 per baarrel has done a good job of rejecting the notion that without production cuts it’s going to hell in a hand basket. Unless we can un-invent the technology gains of the last few years we won’t see dramatic upside and if the upshot is that oil prices settle into a range and better still, the correlation between non oil-producing countries currencies and the price of oil falls away, then that’s even better.

In the meantime, the oil market’s willingness to get back to business as usual has been greeted by a loud cry of ‘Party On, Dudes’ in equity markets.

An ‘excellent’ film reference from Kit...

Yesterday’s oil price slide has been completely wiped out: