The U.S. Federal Reserve released recently its second report on vulnerabilities to the U.S. financial system, citing rising levels of risky corporate debt one of its top concerns.
The report identified several risks that could lead to financial instability. While the current, slow expansion is nearing an all-time record, a number of touchy factors could upset the markets, leading to a sharp stock or bond sell-off — or worse, a deep, new recession.
While no one can accurately predict when, or if, a recession might occur, the Fed is watching certain areas of the financial system closely in order to prepare their response if one begins.
