The Federal Reserve says the fragility of the US financial system remains "worth paying attention to."

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ME News, May 21 (UTC+8), the Fed's April meeting minutes showed that officials updated their assessment of the stability of the U.S. financial system.
Overall, financial vulnerabilities in the U.S. financial system remain "notable."
Asset valuation pressures are elevated, and housing valuation measures are near historical highs.
Vulnerabilities related to non-financial corporate and household debt are assessed as "moderate."
Household balance sheets remain strong, with substantial housing equity.
Although overall corporate debt growth has been moderate in recent years, private credit has grown rapidly.
Some private credit instruments experienced net outflows in the first quarter, partly due to concerns that AI could disrupt the business models of certain industries (especially software), thereby affecting credit quality.
Vulnerabilities related to financial sector leverage are assessed as "notable."
Hedge fund leverage remains elevated, especially in leveraged trading in the U.S. Treasury market.
Life insurance companies also maintain high leverage ratios.
In comparison, bank regulatory capital ratios remain relatively high by historical standards.
However, market-value-adjusted bank capital ratios declined in the first quarter and remain below pre-2022 levels, although they are clearly above the lows of a few years ago.
Bank asset durations have fallen back to pre-pandemic levels, indicating that their interest rate risk exposure has eased compared to recent years.
Vulnerabilities related to funding risk are assessed as "moderate."
(Source: Jin Shi)
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