IMF flags risk of disorderly selloff from bond stress, stretched valuations

The IMF cautioned that overstretched asset valuations and rising bond-market stress could trigger a 'disorderly' correction, highlighting vulnerabilities in leveraged non-bank financial institutions. In its Global Financial Stability assessment, the Fund urged tighter oversight, improved liquidity risk management, and coordinated policy action to contain spillovers. It warned that rapid repricing across rates and credit could amplify margin calls and funding strains, especially in private credit and real-estate finance. Policymakers were advised to bolster transparency and data sharing to track hidden leverage and interconnected exposures.