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The surge in risky asset prices this year has made them increasingly susceptible to a tumble if economic growth takes a turn for the worse, the pandemic escalates, or investors lose confidence.
That’s the message from the US Federal Reserve, which is also concerned about the rise of stablecoins which underpin the cryptocurrency market.
In its latest financial stability report, the Fed flagged that prices of risky assets have generally risen further since its previous report six months ago.
Despite concerns about the spread of the Delta variant of the virus that causes COVID-19, asset prices have been supported by increased earnings expectations and low Treasury yields, it says.
In a warning to the markets, they say:
Prices of risky assets generally increased since the…