The Federal Reserve just released its semiannual checkup on the U.S. financial system, dated April 23, 2026. The previous version came out in November 2025.
Start with the good news. Banks are still disclosing capital adequacy ratios that are close to record highs. The proportion of deposits not covered by FDIC insurance has fallen substantially from the highs seen in 2022 and early 2023. Broker-dealers keep leverage subdued, with asset-to-equity ratios slightly below the median over the past decade.
Asset valuation pressures are elevated. The price-to-earnings multiple for S&P 500 firms remained near the top end of its long-term range. A measure of the extra return investors demand for holding stocks over safe assets stayed far under its historical norm.
Longer-term Treasury yields rose relative to short-term rates as geopolitical uncertainty contributed to market swings. The extra yield investors require on corporate bonds versus Treasuries stayed about flat and low compared to historical levels.
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U.S. home price growth has kept decelerating, yet the relationship between house values and rental costs persisted in the elevated part of its historic band. Commercial real estate price indexes based on sales data have steadied after steep drops, but risks from maturing debt obligations persist.
Consumers are falling behind on credit card and auto loan payments at a pace that exceeds the averages of the past decade. Home loan payment arrears stayed minimal thanks to substantial home equity and conservative lending practices, though problems are appearing for FHA and VA loans and for recent buyers with small down payments.
On the institutional side, among leveraged investors, The biggest life insurance companies maintained debt ratios in the top quarter of their historical range. Non-traded BDCs saw a sharp rise in investor redemption demands, and several firms capped the amount that could be withdrawn.
The ratio of total borrowing by firms and individuals to GDP has kept declining, reaching values unseen since the early 2000s. Several indicators of debt levels among publicly listed companies remained elevated by historical standards, yet robust earnings relative to interest expenses implied they could comfortably handle their obligations. Lower-rated public companies and higher-risk private firms, particularly those using variable-rate borrowings from leveraged loans and private credit markets, had weaker repayment ability.
The financial stability review additionally covers near-term hazards drawn partly from conversations with market participants. Market contacts were questioned about threats to U.S. financial stability and most often mentioned geopolitical tensions, an oil price spike, AI-related dangers, private credit, and ongoing inflation.
Two special boxes in the report examine financial stability topics: one on revised classification of nonbank financial institutions and another on private credit developments.
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