A sharp decrease in market functioning is noted by the Bank of England in its latest Financial Stability Report.
US government bonds were the only primary market — out of 15 — described as ‘functioning’ in May; eight were described as impaired. The month before, eight were functioning and two were impaired. Highly recommend a closer inspection of the table to the right – though even at a distance, you get the idea.
Commercial property is the biggest headache globally. Indeed, the housing market as a whole makes an appearance in two of the six key risks noted by the Bank:
- Exposure to european sovereign debt;
- A sustained reversal in investor risk appetite;
- Investors divesting Europe, buying Asia;
- Defaulting borrowers, esp. commercial property;