How to Read the Federal Reserve Financial Stability Report — Valuations, Debt, Leverage and Funding Risks

As of 9 November 2026, 00:34 KST (retrieved by this page at that time); latest listed on the agency page at retrieval: the Financial Stability Report of the Federal Reserve Board. PDF cover: May 2026; report page: Last Update: May 08, 2026; data cutoff stated in the report: April 23, 2026. Primary source: https://www.federalreserve.gov/publications/files/financial-stability-report-20260508.pdf^[1][2]

Comparison basis: levels are as printed in the report's tables (billions of dollars, nominal, through 2025:Q4 unless noted) and growth rates are the Fed's, rounded to one decimal. The report does not print 2024:Q4 levels, so the previous column is this page's back-calculation from rounded growth and is approximate. Hedge fund figures run on a Q3 basis.^[1]

In three lines

1. The Fed's semiannual report assesses four vulnerabilities of the U.S. financial system: asset valuations, business and household borrowing, financial-sector leverage and funding risks.
2. Total private nonfinancial credit was $43,144 billion at 2025:Q4 against nominal GDP of $31,442 billion (Table 2.1).
3. Runnable money-like liabilities were $27,033 billion (Table 4.1), which the Fed puts at 86 percent of GDP at the end of 2025.^[1]

Framework. The Board separates shocks, which are hard to predict, from vulnerabilities, which can be monitored, and groups vulnerabilities into valuation pressures, borrowing by businesses and households, leverage in the financial sector and funding risks. "This report reflects market conditions and data as of April 23, 2026."^[1]

Table conventions. "Growth rates are nominal and are measured from Q4 of the year immediately preceding the period through Q4 of the final year of the period." For hedge funds: "Hedge fund data start in 2012:Q4 and are updated through 2025:Q3." "Growth rates for the hedge fund data are measured from Q3 of the year immediately preceding the period through Q3 of the final year of the period." For runnable liabilities: "Total runnable money-like liabilities exceed the sum of listed components." "Bond mutual funds are not part of the total runnable money-like liabilities."^[1]

Survey views are not the Fed's. "During March and April, the staff surveyed 20 contacts, including professionals at broker-dealers, banks, investment funds, and advisory firms." "This section is a summary of the views provided by survey respondents and should not be interpreted as representing the views of the Federal Reserve Board or the Federal Reserve Bank of New York." The fall 2025 survey covered 23 contacts, so the spring and fall percentages rest on different, small samples.^[1]

Two leveraged loan figures. Table 1.1 shows leveraged loans of $1,549 billion growing 9.2%, while Table 2.1 shows leveraged loans of $1,380 billion growing 12.6%, both through 2025:Q4 and both sourced to PitchBook. "The amount outstanding shows institutional leveraged loans and generally excludes loan commitments held by banks." Table 2.1 lists the item under corporate business credit; the report does not explain the difference between the two amounts, so the reason is not established (see claims).^[1]

Debt vs GDP. "Total debt of businesses and households as a fraction of gross domestic product (GDP) continued to trend down, falling to levels not seen since the early 2000s." In Table 2.1, business credit ($22,209 billion) and household credit ($20,935 billion) add to the $43,144 billion total, which is about 1.37 times nominal GDP (this page's calculation). "Total household-sector credit includes debt owed by other entities, such as nonprofit organizations."^[1]

Runnables vs GDP. "Table 4.1 gives the outstanding amounts of runnable money-like liabilities, and figure 4.1 shows the total relative to GDP standing at 86 percent at the end of 2025." Dividing Table 4.1's $27,033 billion by Table 2.1's $31,442 billion GDP gives 86 percent (this page's calculation). Money market funds in Table 4.1 (government 6,375, prime 1,220, tax exempt 151) add to the 7,746 total; the text's $7.9 trillion for total MMF assets refers to January 2026, a different date.^[1]

Bank fair value losses. "The fair values of banks’ available-for-sale (AFS) and held-to-maturity (HTM) portfolios were below their book values by a combined $300 billion at the end of 2025 (figure 3.3)." The sample is all bank holding companies and commercial banks, per the figure notes. "Leverage at hedge funds remained near all-time highs and was concentrated in a small number of large funds."^[1]

Survey shares. In the spring 2026 survey of 20 contacts, geopolitical risks were cited by 75%, an oil shock by 70%, artificial intelligence and private credit by 50% each and persistent inflation by 45%; with 20 respondents these correspond to 15, 14, 10 and 9 contacts (this page's calculation).^[1]

A revision inside the report. Box 3.1 says the classification of bank credit to nonbank financial institutions was updated again, and that commitments to private equity, BDCs and private credit were revised up by $261 billion in the fourth quarter of 2025, so that category's levels are not comparable with earlier reports without adjustment.^[1]

Dates kept apart. PDF cover: May 2026. Report page: Last Update: May 08, 2026. Data cutoff: April 23, 2026. The PDF file name carries 20260508. The page lists two editions in most recent years (for example November and April in 2025); a November 2026 edition was not listed when retrieved, and the date of the next edition is not established by these sources.^[1][2]