From the US Federal Reserve semi-annual report on financial stability.
Headlines via Reuters:
- Recent turmoil in banking industry has stabilized, but could weigh on credit conditions going forward - financial stability report
- The banking sector overall remained resilient with substantial loss-absorbing capacity
- Policy interventions by bank regulators limit the potential for further stress, domestic banks have ample liquidity overall
- Funding strains were notable for some banks, but overall funding risks across the banking system were low
- It is prepared to address any bank liquidity pressures that may arise, committed to ensuring deposits remain safe and banks can continue to provide access to credit
- Large banks subject to liquidity coverage ratio had sufficient levels of high-quality liquid assets to withstand expected short-term cash outflows
- Silicon valley bank and signature bank were outliers in terms of their heavy reliance on uninsured deposits; most banks had a much more balanced mix of liabilities
- Runs on silicon valley bank and signature bank were of unprecedented speed
- Persistent inflation and monetary tightening, alongside banking sector stress, are top-cited potential risks by survey respondents
- Prime money market funds and other cash-investment vehicles remain vulnerable to runs and contribute to the fragility of short-term funding markets
- Amount of high-quality liquid assets decreased for banks but remained high compared with pre-pandemic levels
- Commercial real estate prices have declined since November but valuations remain high
- Nearly half of respondents to fed survey on near-term risks cited US debt limit, which was not singled out as a risk in prior report
Nothing in those headlines re the bank stresses since March is of much surprise. A key question is if there are more bank failures hiding in the weeds.
