The latest Federal Reserve Financial Stability Report identifies growing global trade tensions, increased policy uncertainty and concerns regarding the sustainability of US debt as the biggest risk to the stability of the US financial system.
The report is the first six months of risk survey since President Donald Trump returned to the White House. The report reveals a sharp rise in concerns among market participants, with 73% of respondents citing the risks of global trade as their main concern.
Policy uncertainty is also high among fiscal fears, with half of respondents citing uncertain or changing economic policies as their main concerns, reflecting growing concerns over potential regulatory and fiscal changes under the new administration. This represents a significant increase from the same period last year.
The Fed’s report also highlights recent growing concerns about market volatility. Concerns about the functioning of the U.S. Treasury market was expressed by 27% of respondents, up from 17% in previous surveys. Analysts say liquidity pressures and changing investor behavior are contributing to instability in one of the world’s most important financial markets.
The report also highlights growing concerns about the withdrawal of foreign investors from US assets and the potential impact on the value of the dollar. These developments could have a wide range of impacts on interest rates, capital flows and broader financial positions.
*This is not investment advice.
