saferbankingresearch.com/article/The-Fed-Is-A-Paper-Tiger-202503051743.html
In light of Jerome Powell speaking Friday thought this was a great article
The below quote is from the FED as referenced in the article and Avi Gilburt rightfully asks why they would make stress tests LESS STRINGENT....hmmnnn
"The current severely adverse scenario features a slightly smaller increase in the unemployment rate in the United States compared to the 2024 severely adverse scenario. The current severely adverse scenario also features slightly smaller declines in house prices, which reflects the Scenario Design Framework’s response to the slightly lower ratio of nominal house prices to per capita disposable income at the end of 2024.
The current severely adverse scenario reflects a decline in commercial real estate prices that is 10 percentage points smaller compared to the previous year’s severely adverse scenario, recognizing that those prices have already declined by a little more than 10% relative to their most recent peaks and limiting the procyclicality in the stress tests.
The potential for spillover effects in asset markets and sharp changes in investor sentiment are captured by a decline in equity prices and an increase in corporate bond spreads, although these changes are less severe relative to last year’s scenario, reflecting less severe stress in commercial real estate markets.
The international component of the current severely adverse scenario shows a recessionary episode that, relative to last year’s severely adverse scenario, is the same for the euro area and less severe in all other countries or country blocs."
In light of Jerome Powell speaking Friday thought this was a great article
The below quote is from the FED as referenced in the article and Avi Gilburt rightfully asks why they would make stress tests LESS STRINGENT....hmmnnn
"The current severely adverse scenario features a slightly smaller increase in the unemployment rate in the United States compared to the 2024 severely adverse scenario. The current severely adverse scenario also features slightly smaller declines in house prices, which reflects the Scenario Design Framework’s response to the slightly lower ratio of nominal house prices to per capita disposable income at the end of 2024.
The current severely adverse scenario reflects a decline in commercial real estate prices that is 10 percentage points smaller compared to the previous year’s severely adverse scenario, recognizing that those prices have already declined by a little more than 10% relative to their most recent peaks and limiting the procyclicality in the stress tests.
The potential for spillover effects in asset markets and sharp changes in investor sentiment are captured by a decline in equity prices and an increase in corporate bond spreads, although these changes are less severe relative to last year’s scenario, reflecting less severe stress in commercial real estate markets.
The international component of the current severely adverse scenario shows a recessionary episode that, relative to last year’s severely adverse scenario, is the same for the euro area and less severe in all other countries or country blocs."
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.