Federal Reserve Flags Risks Tied to Asset-Valuation Pressures

The Federal Reserve noted vulnerabilities tied to stock and real-estate valuations in a report released Friday, saying that asset prices were notable despite declines in some markets earlier this month.

“Even after recent declines in equity prices, prices remained high relative to analysts’ earnings forecasts, which adjust more slowly than market prices. Treasury yields across maturities remained at the higher end of their levels since 2008,” the report said.

The central bank also underscored leverage in the sector and pointed to funding risks as concerning in its Financial Stability Report, which reflects market conditions and data as of April 11, ...