Fed warns that a 'particularly large' plunge in market prices is possible if risks materialize

The Federal Reserve issued a cautionary note Wednesday about risks to financial stability, saying trade tensions, geopolitical uncertainty and a build-up in corporate debt among firms with weak balance sheets pose strong threats. In a lengthy first-time report on the banking system and corporate and business debt, the Fed warned of "generally elevated asset prices that appear high relative to their historical ranges”. In addition, the central bank said on-going trade tensions, which are running high between the U.S. and China, coupled with an uncertain geopolitical environment could combine with the high asset prices to provide a notable shock.

(Source: CNBC)