IMF: Financial stability risks have risen since April report

In its recently published Global Financial Stability Report, the International Monetary Fund warned that financial stability risks have risen since the April report and said that the balance of risks are “significantly skewed” to the downside, per Reuters.

Additional takeaways

“Financial conditions have worsened and there is a risk of disorderly tightening.”

“Policymakers must balance resolute action to reduce inflation while avoiding disorderly market conditions.”

“Seeing heightened risk of rapid, disorderly repricing in financial markets, amplified by existing vulnerabilities and poor liquidity.”

“Global bank stress test shows up to 29% of emerging market banks would be undercapitalized in a severe economic downturn.”

“Property downturn in China has deepened with a heightened risk of spillovers to banking, corporate and local government sectors.”

Market reaction

Safe-haven flows continue to dominate the financial markets in the American session and the S&P 500 Index was last seen losing 1% on a daily basis.