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Fortune: Fed Warns About Rising Prices of Risky Assets, Adding to Crash Worries

November 09, 2021
Market Crash Warning

Article By Jesse Hamilton in Fortune Magazine

The Federal Reserve is warning that prices of risky assets keep rising, making them more susceptible to perilous crashes if the economy takes a turn for the worse.  

“Asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall,” the Fed said in its twice-yearly Financial Stability Report released Monday.

The central bank also said stable coins pose an emerging threat, that fragility in China’s commercial real-estate sector could spread to the U.S. if it deteriorated dramatically, and that “difficult-to-predict” volatility similar to this year’s meme-stock frenzy could become more frequent as social media increasingly influences trading. 

The Fed’s report, which is meant to highlight risks that could undermine the financial system, flagged many concerns that have appeared in previous documents, such as “structural vulnerabilities” in money market funds.

Another area prompting Fed worries is ......

To read this article in Fortune in its entirety, click here.

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