Isabel Schnabel, a board member of the European Central Bank, is scheduled to deliver a keynote speech at a Bank of England conference on Tuesday.

The event will occur at 1300 GMT / 0800 US Eastern time as part of the Bank of England’s Annual Research Conference, themed “The Future of the Central Bank Balance Sheet.”

Schnabel’s address will centre on the subject of “No Longer Convenient? Safe Asset Abundance and r*.”

Her remarks are expected to provide insight into how the European Central Bank currently views the balance of risks in financial markets. Given her influence within the ECB, any mention of long-term interest rate trends or liquidity conditions could shift expectations around future policy decisions.

Recent discussions among policymakers have highlighted concerns about the availability of safe assets and how this affects borrowing costs. If Isabel outlines new considerations regarding this issue, we could see adjustments in how traders position themselves. A speech that leans towards tighter financial conditions might prompt market participants to reconsider how they price longer-dated assets.

The timing of this address is also important. Markets have been searching for clearer guidance on the direction of monetary policy, not just in Europe but globally. Data over the past few weeks has reinforced the sense that inflation is moving closer to target, yet uncertainty remains. If her remarks suggest that officials see risks tilted in one direction more than previously thought, that could influence expectations around bond supply dynamics.

Speeches like this often prompt immediate reactions, even before any formal policy action. If Isabel signals that liquidity trends are shifting, that could alter market participants’ expectations around funding conditions. Meanwhile, if her comments indicate a more cautious stance on withdrawing support, that could affect sentiment on short-term rate projections.

What matters most is whether she introduces a perspective that markets have not yet fully priced in. If she challenges assumptions about how quickly balance sheets might shrink, that could reshape expectations for how central banks manage excess liquidity. With traders already adjusting to shifting rate expectations, any change in this narrative could be reflected in asset price movements soon after her remarks.

For those tracking sovereign yields and bond spreads, any reference to structural shifts in safe asset demand could be particularly relevant. If Isabel suggests that supply constraints could affect rate dynamics, that may lead to reassessments of where fair value lies for longer maturities. This would have implications far beyond the euro area, given the interconnected nature of global bond markets.

As we head into the coming weeks, attention will remain on how central bank officials balance financial stability concerns with their broader policy objectives. Any deviation from the prevailing expectations could be met with quick adjustments in positioning. Keeping a close eye on both the speech and any subsequent commentary from colleagues will help in interpreting how policy signals are shifting.