Fed Minutes: US Financial System Still Very Fragile
According to the July Fed minutes wey Federal Reserve release, staff assessments talk say di US financial system get serious financial vulnerability. Di Fed minutes show say asset valuations don stretch: equities dey trade for di upper side of historical P/E ranges, and high-yield credit spreads don reduce reach multi-year low. Housing valuations don drop small but still dey high. Vulnerabilities wey relate to non-financial corporate and household debt moderate: household debt-to-GDP dey reach two-decade low, and listed firms still get strong debt service capacity. Rapid private-sector debt growth and declining interest coverage ratios dey suggest say corporate vulnerability dey rise. These Fed minutes highlight persistent financial vulnerability even though balance sheets generally strong. Crypto traders suppose dey observe valuation pressures and credit spreads for possible market corrections and volatility signals.
Bearish
Di way we US financial system dem call "significantly" vulnerable and di evidence we show sey valuation for equity and credit market don high pass, e mean sey risk for correction don high. For history, wen high-yield spreads narrow and P/E ratio rise, market dey fall before, especially for late 2018 and early 2020. Crypto market dey follow equity risk trend, and traders fit react to financial stress sign by reduce wetin dem dey exposed, wey fit make market volatility rise. For short term, to dey monitor credit spread and liquidity condition na big tin; sudden change fit cause sell-off. For long term, if vulnerability still dey, e fit reduce risk appetite and capital wey dey flow into crypto. So, the release of these Fed minutes mean bad for crypto trading sentiment.