Rising commercial real estate prices may leave some small banks vulnerable to a drop in the market, the Federal Reserve said Tuesday. In a report to Congress on financial stability, which accompanied Fed Chairwoman Janet Yellen’s testimony to the Senate Banking Committee, the central bank said that commercial real estate prices, which have been an area of growing concern at the central bank, rose further. Overall financial vulnerabilities in the U.S. financial system overall have continued to be moderate since mid-2016, the Fed said. Valuation pressure in some asset classes have been rising, particularly late last year, the report said. Outstanding riskier corporate debt edged down over the past year, but issuance of leveraged loans was strong.
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