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Investors Underestimate Risk of a Financial Shock, IMF Warns

  • U.S. stock valuations appear to be stretched, fund says
  • Short-term risks to global stability are up ‘modestly’: IMF
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Investors may be ignoring the risk that financial conditions could tighten sharply and send tremors through the global economy, the International Monetary Fund warned.

“Asset valuations appear to be relatively high in some markets, notably in the United States,” the IMF said Wednesday in its latest Global Financial Stability Report. “Overall, market participants appear complacent about the risk of a sharp tightening of financial conditions.”