Brian Chappatta, Columnist

The Fed Ignores a Key Bubble Risk for the Stock Market

The absence of a discussion about record low real yields in the central bank's latest financial stability report was a mistake.

November 9, 2021 at 4:00 PM UTC

By Brian Chappatta

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

If sure feels as if the stock market is in a bubble.
Photographer: Manjunath Kiran/AFP/Getty Images

Provide news feedback or report an error

Site feedback:

Take our Survey

This article is for subscribers only.

When the Federal Reserve released its semiannual financial stability report in May, I wrote that the central bank came as close as it could to saying “bubble.” So imagine what it could have said in its latest update, which was released on Monday.

After all, in the six months since the first report, the S&P 500 has advanced 13%, Bitcoin has reached unprecedented heights, with the broader crypto market surpassing $3 trillion in size, and even special purpose acquisition companies have clawed out gains. If markets weren’t in a bubble in May, it sure feels as if they’re in one now. And yet the Fed is showing no urgency to do anything to manage this risk.