Fed Warned: Uncertainty Is a New Threat in the Markets

Key Data from the Fed's Financial Stability Report

The Federal Reserve (Fed) stated in its November Financial Stability Report that policy uncertainty is the most significant risk facing the American financial system. The Fed highlighted that geopolitical risks, rising long-term interest rates, ongoing inflation, and potential impacts of changes in perceptions of artificial intelligence are among the main uncertainties.

Policy Uncertainty and Markets

The report noted that participants continue to express concerns regarding trade policy, central bank independence, and the accuracy of economic data. In this context, it was emphasized that the anxiety generated by policy uncertainty could lead to fluctuations in asset prices. The potential for economic uncertainties to disrupt market dynamics stands out as a critical point of focus for analysts.

Effects of Geopolitical Risks

Participants indicated that they continue to observe the potential for the expansion of current geopolitical tensions. The persistent inflation rates pose an ongoing threat to financial stability, particularly when combined with a weakening labor market, which is noteworthy.

Changes in Artificial Intelligence Perception and Risky Assets

The impact of artificial intelligence on stock performance has recently become a major topic of discussion. The Fed's report states that changes in perceptions in this area could lead to corrections in risky assets. If these corrections are significant enough, it is anticipated that they could result in further slowdowns in the labor market and tightening of financial conditions. This situation has been recorded as an important development for investors to pay attention to.