{"id":224528,"date":"2025-10-14T17:43:09","date_gmt":"2025-10-14T17:43:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/224528\/"},"modified":"2025-10-14T17:43:09","modified_gmt":"2025-10-14T17:43:09","slug":"imf-warns-global-markets-could-be-headed-for-disorderly-correction","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/224528\/","title":{"rendered":"IMF warns global markets could be headed for \u2018disorderly\u2019 correction"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

The International Monetary Fund logo is displayed during IMF\/World Bank meetings in Washington in 2017. The body sees vulnerabilities stemming from changes in several parts of the financial system.Yuri Gripas\/Reuters<\/p>\n

Global markets are getting too comfortable with risks like trade wars, geopolitical tensions and yawning government deficits, which, combined with already overpriced assets, increase the chance of a \u201cdisorderly\u201d market correction, the International Monetary Fund said on Tuesday. <\/p>\n

Underscoring the IMF\u2019s warning, President Donald Trump\u2019s<\/a> revived threats on Friday to hike tariffs on China<\/a> stoked investor fears of a major asset price correction. The comments sparked a sell-off in U.S. stocks and sent bitcoin tumbling. <\/p>\n

Despite this recent volatility, markets have mostly been resilient since April, when Trump unleashed his trade war, underpinned by expectations of monetary easing in most major advanced economies. However, this market optimism masks the potential damage from tariffs<\/a> and high government debt. The IMF warned that the close ties between banks and less-regulated financial firms could amplify these risks.<\/p>\n

\u201cBeneath the calm surface, the ground is shifting in several parts of the financial system, giving rise to vulnerabilities,\u201d the body wrote in its semi-annual Global Financial Stability Report.<\/p>\n

\u201cValuation models indicate that risk asset prices are well above fundamentals, increasing the probability of disorderly corrections when adverse shocks occur,\u201d it wrote. Despite some negative economic data, equity and corporate credit valuations are \u201cfairly stretched\u201d as enthusiasm over AI mega-cap stocks drives historic stock market concentration. That creates the risk of a \u201csudden, sharp correction\u201d if expected returns fail to justify lofty valuations, the IMF said.<\/p>\n

Bank of England, IMF warn about potential AI bubble<\/a><\/p>\n

Opinion: Gold buyers dodging bubbles may be blowing one<\/a><\/p>\n

Analysis of sovereign bond markets also highlights growing pressure from widening fiscal deficits on market functioning. While bond markets have been mostly stable so far, abrupt jumps in yields could strain bank balance sheets and pressure open-ended funds like mutual funds, the IMF said. U.S. bond markets sold off last month as concerns about global fiscal health escalated, although the pain was quickly reversed and bonds rallied on weak economic data.<\/p>\n

The IMF added that central banks should remain alert to tariff-driven inflation risks and take a cautious stance on monetary easing to minimize further valuation spikes in riskier assets. Central bank independence is \u201ccritical\u201d for anchoring market expectations and allowing those institutions to fulfill their mandates, it added, without referring to a specific institution. Trump\u2019s attacks on Federal Reserve policy-makers are emerging as the biggest threat to central bank independence in decades, sparking worries among central bankers worldwide, Reuters reported in August.<\/p>\n

The IMF also called for \u201curgent fiscal adjustments\u201d to curb deficits and ensure resilient bond markets.<\/p>\n

Heightened interconnectedness between banks and the more lightly regulated nonbank sector would amplify any shocks stemming from sectors such as private credit or cryptocurrencies, the IMF said. The group for years warned about patchy nonbank oversight but cautioned on Tuesday that the sector \u2013 which includes insurers, pension funds and hedge funds \u2013 continues to grow and now holds roughly half of the world\u2019s financial assets. In the United States and Europe, many banks have nonbank exposures that exceed their high-quality loss-absorbing capital, the IMF said.<\/p>\n

Roughly 10 per cent of U.S. banks and 30 per cent of European banks would experience a substantial hit to their capital if nonbanks drew down all their credit lines, according to an IMF analysis.<\/p>\n

\u201cVulnerabilities in the nonbank sector are interconnected,\u201d the IMF wrote. \u201cThey can quickly transmit to the core banking system, amplifying shocks and complicating crisis management.\u201d<\/p>\n

The body urged policy-makers to adopt a more comprehensive approach to assessing these less visible risks, particularly around interactions between banks and nonbanks.<\/p>\n

Echoing European policy-makers, the IMF also called on governments to adopt a comprehensive policy response to crypto assets, including stablecoins, the adoption of which could weaken a government\u2019s control over its own currency and disrupt the traditional banking system.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: The International Monetary Fund logo is displayed during IMF\/World Bank meetings in Washington…\n","protected":false},"author":2,"featured_media":224529,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[2428,2416,2429,4,2408,2430,28,103,2407,2422,2423,2418,2409,2406,101,526,192,2421,2414,2441,2410,2411,2420,2417,149,983,2431,2413,2436,2437,2439,2434,2438,2432,2435,2412,2425,2426,111,2424,2433,2415,74,2427,2419,194,965,2440],"class_list":["post-224528","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/224528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=224528"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/224528\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/224529"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=224528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=224528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=224528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}