Fed’s Cook: Expectations of near-term policy rates do not appear to be driving long end

  • Residential and commercial property prices remain above levels historically associated with fundamentals
  • If commercial mortgage delinquency rates force sales, committal real estate prices ‘could decline sharply’
  • Business borrowing is at high levels, but measures of debt servicing capacity remain strong overall due to profits and limited impact of high rates so far
  • In terms of debt, household sector looks quite resilient, though there are emerging signs of stress for those with weak credit
  • Vulnerabilities among non-banks could amplify stress of tightened financial conditions and slowing economy
  • Fed cannot anticipate all risks but can build resilience to shocks; particularly important to enhance resilience of large banks

She’s flagging some risks in real estate here but nothing the market doesn’t already know about.

This article was written by Adam Button at www.forexlive.com. Source