The Federal Reserve’s latest Financial Stability Report identifies rising global trade tensions, increasing policy uncertainty, and concerns about the sustainability of U.S. debt as the top risks to the stability of the U.S. financial system.
The report is the first six-month risk survey since President Donald Trump returned to the White House. The report reveals a sharp increase in concerns among market participants, with 73% of respondents citing global trade risks as their primary concern, more than double the figure reported in the previous survey conducted last November.
Policy uncertainty also ranks high among financial fears, with half of respondents citing uncertain or changing economic policies as their main concern, reflecting growing concern about 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 growing concerns about recent market volatility. Concerns about the functioning of the U.S. Treasury market were voiced by 27% of respondents, up from 17% in the previous survey. Analysts say liquidity pressures and changing investor behavior are contributing to instability in one of the world’s most critical financial markets.
The report also notes growing concerns about foreign investor withdrawal from U.S. assets and the potential impact on the value of the dollar. These developments could have far-reaching effects on interest rates, capital flows and broader financial conditions.
*This is not investment advice.
