Seventy-three per cent of respondents cited global trade risks as a top concern, more than twice the number reported in November; Half cited policy uncertainty in general as a top concern, up as well from the last survey.
The US Fed’s Financial Stability Report counts rising global trade risks, general policy uncertainty and the US debt sustainability among the key potential risks to the US financial system.
While half of the respondents cited policy uncertainty as a top concern, 73 per cent cited global trade risks.
The banking system is sound and resilient as firms maintained robust capital ratios, it noted.
“Concern over changes to trade policy was the top-cited risk this cycle. While many respondents viewed tariffs as the key risk, some noted that the domestic economy could weather incremental tariffs on imported goods with only modest disruption,” the report stated.
“Respondents considered that the potential for an escalatory trade war could have more severe consequences,” it noted.
Respondents cited “changes in government spending priorities and the extent of U.S. international engagement” as driving uncertainty.
Twenty-seven per cent of contacts worried about functioning Treasury markets, up from 17 per cent in the last survey. Foreign divestment of US assets and the value of the dollar also rose on the list of concerns.
Though the US banking system remained sound and resilient as firms maintained robust capital ratios, bank credit commitments to less regulated non-banks continued to increase, the report added.
Fibre2Fashion News Desk (DS)
