Fed: U.S. authorities fiscal sustainability tops the checklist of monetary system dangers

The Fed’s twice yearly Monetary Stability Report highlights:

• U.S. authorities fiscal sustainability tops the checklist of monetary system dangers cited within the Fed survey of market contacts for the semi-annual Monetary Stability Report.
• Persistent inflation dropped to No. 5 on the dangers checklist from No. 1 within the prior survey, now tied with international commerce dangers.
• Commerce points, final cited as a salient threat in Could 2020, had been beforehand a high concern throughout Trump’s first time period in 2019.
• Center East tensions, coverage uncertainty, and a possible U.S. recession are among the many top-cited dangers within the Fed survey.
• The NY Fed surveyed 24 market contacts from August to October on dangers to U.S. monetary stability.
• Asset valuation pressures are “elevated,” although company bond spreads stay low; enterprise and family debt dangers are thought-about “average.”
• Liquidity situations within the Treasury money market seem challenged and will amplify shocks.
• Monetary sector leverage vulnerabilities stay notable, with hedge fund leverage close to the best ranges since 2013.
• Stablecoin belongings rose to just about $170 billion by early November, with the potential for fast scaling and vulnerability to runs.

This text was written by Emma Wang at www.ubaidahsan.com.



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