Rising tension in the Middle East poses a greater near-term risk to the US financial system than persistent inflation and high interest rates, a survey released on Friday by the Federal Reserve showed.
According to the Fed's financial stability report, 46 per cent of contacts cited Middle East tension as a salient risk to the financial system, compared to 33 per cent for inflation and monetary tightening.
The financial stability report is a biannual survey released by the Fed to assess the resilience of the US financial system. Friday's report showed a 14 per cent increase in those who considered Middle East tension to be a risk. Those who viewed inflation as a risk, meanwhile, fell from 72 per cent to 33 per cent.
Fiscal debt sustainability topped the potential risks to the financial system, with 54 per cent of respondents considering it a near-term risk.
“Respondents noted the most immediate risk in Middle East tensions would be a widening of the conflict within the region, with some highlighting a tail risk that it could become a global conflict,” the report said.
The survey said the main channels affecting financial stability would be disruptions to energy supplies and broader commodity markets.
Geopolitical risks have often featured in the rate-setting Federal Open Market Committee's discussions since the onsets of the war in Ukraine in 2022 and in the Middle East last year, according to minutes released by the central bank.
“Further escalation of geopolitical tensions could reduce economic activity, boost inflation, and heighten volatility in global financial markets,” the report said.
The report added that a combination of high asset valuation pressures, along with rising geopolitical and policy uncertainty, “increases the risk of a sudden pullback from risk-taking”. Such a scenario could lower asset prices, leaving US businesses and investors exposed to risks.
Fed Chair Jerome Powell pointed to elevated geopolitical risks as potential “black clouds” that the central bank is watching with respect to the economic outlook. While he noted the conflicts have had little impact on the economy so far, he said this could change depending on things such as oil prices.
The price of oil has been relatively stable after spiking earlier this year. The price of Brent crude oil closed Friday at $71.20 per barrel on Friday while West Texas Intermediate crude oil was at $71.16 per barrel.
Meanwhile, the US economy keeps humming. Backed by robust consumer spending, the nation's economy grew by 2.8 per cent last quarter. At the same time, the unemployment rate remains a low 4.1 per cent while inflation ticks closer down to the Fed's 2 per cent goal.
Those developments have brought increased expectations that the economy can achieve a soft-landing scenario. The Fed, which has lowered interest rates by 75 basis points since September, will determine in December if it needs to reduce policy again.
The positive inflation outlook was reflected in Friday's survey.
The number of those who believed persistent inflation and monetary tightening fell by 59 per cent. At the same time, 38 per cent consider a recession to remain a risk, pointing to some uncertainty in the outlook.
Respondents were also increasingly concerned about the potential of a global trade war, “noting the potential for tariff barriers to prompt retaliatory protectionist policies that would negatively affect global trade flows and put renewed upwards pressure on inflation”.
Those concerns have spilt over into the Treasury market, with yields on the 10-year Treasury rising despite the Fed's rate cuts.
The report found that asset valuation pressures remain elevated, while vulnerabilities from household and business debt is moderated. Still, the Fed noted delinquencies on credit cards and auto loans are above pre-pandemic loans.
Meanwhile, the banking system remains resilient and funding risks remain "notable" despite decreasing somewhat.
Mohammed bin Zayed Majlis
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Simon Rushton: War vet raises £12m for health workers
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
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Analysis
Maros Sefcovic is juggling multiple international trade agreement files, but his message was clear when he spoke to The National on Wednesday.
The EU-UAE bilateral trade deal will be finalised soon, he said. It is in everyone’s interests to do so. Both sides want to move quickly and are in alignment. He said the UAE is a very important partner for the EU. It’s full speed ahead - and with some lofty ambitions - on the road to a free trade agreement.
We also talked about US-EU tariffs. He answered that both sides need to talk more and more often, but he is prepared to defend Europe's position and said diplomacy should be a guiding principle through the current moment.
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THE BIO:
Sabri Razouk, 74
Athlete and fitness trainer
Married, father of six
Favourite exercise: Bench press
Must-eat weekly meal: Steak with beans, carrots, broccoli, crust and corn
Power drink: A glass of yoghurt
Role model: Any good man
Tomorrow 2021
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
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• The National announces Future of News journalism competition
• Round up: Experts share their visions of the world to come
School uniforms report
The five pillars of Islam
1.
2.
3.
4.
5.
UK's plans to cut net migration
Under the UK government’s proposals, migrants will have to spend 10 years in the UK before being able to apply for citizenship.
Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.
But what are described as "high-contributing" individuals such as doctors and nurses could be fast-tracked through the system.
Language requirements will be increased for all immigration routes to ensure a higher level of English.
Rules will also be laid out for adult dependants, meaning they will have to demonstrate a basic understanding of the language.
The plans also call for stricter tests for colleges and universities offering places to foreign students and a reduction in the time graduates can remain in the UK after their studies from two years to 18 months.
Killing of Qassem Suleimani
National Editorial: Suleimani has been killed, now we must de-escalate
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Plastic tipping points
Results
2pm: Handicap Dh 90,000 1,800m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).
2.30pm: Handicap Dh120,000 1,950m; Winner: Just A Penny, Sam Hitchcott, Doug Watson.
3pm: Handicap Dh105,000 1,600m; Winner: Native Appeal, Pat Dobbs, Doug Watson.
3.30pm: Jebel Ali Classic Conditions Dh300,000 1,400m; Winner: Thegreatcollection, Adrie de Vries, Doug Watson.
4pm: Maiden Dh75,000 1,600m; Winner: Oktalgano, Xavier Ziani, Salem bin Ghadayer.
4.30pm: Conditions Dh250,000 1,400m; Winner: Madame Ellingtina, Richard Mullen, Satish Seemar.
5pm: Maiden Dh75,000 1,600m; Winner: Mystery Land, Fabrice Veron, Helal Al Alawi.
5.30pm: Handicap Dh85,000 1,000m; Winner: Shanaghai City, Jesus Rosales, Rashed Bouresly.
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Reading List
Practitioners of mindful eating recommend the following books to get you started:
Savor: Mindful Eating, Mindful Life by Thich Nhat Hanh and Dr Lilian Cheung
How to Eat by Thich Nhat Hanh
The Mindful Diet by Dr Ruth Wolever
Mindful Eating by Dr Jan Bays
How to Raise a Mindful Eaterby Maryann Jacobsen
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Tomorrow 2021
World Mental Health Day
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
The national orchestra
Specs
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Jack Moore: Why the assassination is such a monumental gamble
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• Architecture is over - here's cybertecture
• The National announces Future of News journalism competition
• Round up: Experts share their visions of the world to come
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MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
THREE
More on animal trafficking
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Explained
KILLING OF QASSEM SULEIMANI
National Editorial: Suleimani has been killed, now we must de-escalate
Mina Al Oraibi: Air strike casts a long shadow over the decade ahead
Jack Moore: Why the assassination is such a monumental gamble
Matthew Levitt: Iran retains its ability to launch terror attacks
Damien McElroy: A CEO tasked with spreading Iran's influence
Hussein Ibish: Trump's order on solid constitutional ground
Simon Waldman: Cautious Israel keeping a low profile
COMPANY PROFILE
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Samar Elmnhrawy: How companies in the Middle East can catch up on gender equality
Justin Thomas: Challenge the notion that 'men are from Mars, women are from Venus'
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E-cigarettes report
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part two: how climate change drove the race for an alternative
Killing of Qassem Suleimani
National Editorial: Suleimani has been killed, now we must de-escalate
Jack Moore: Why the assassination is such a monumental gamble
Matthew Levitt: Iran retains its ability to launch terror attacks
Damien McElroy: A CEO tasked with spreading Iran's influence
Hussein Ibish: Trump's order on solid constitutional ground
Simon Waldman: Cautious Israel keeping a low profile
India cancels school-leaving examinations
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While you're here
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- Alistair Burt: Despite Brexit, Britain can remain a world power
- Con Coughlin: Choice of the British people will be vindicated
SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
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• Architecture is over - here's cybertecture
• The National announces Future of News journalism competition
• Round up: Experts share their visions of the world to come
The specs
Engine: 0.8-litre four cylinder
Power: 70bhp
Torque: 66Nm
Transmission: four-speed manual
Price: $1,075 new in 1967, now valued at $40,000
On sale: Models from 1966 to 1970
Killing of Qassem Suleimani
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Mina Al Oraibi: Air strike casts a long shadow over the decade ahead
Jack Moore: Why the assassination is such a monumental gamble
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If you go…
Emirates launched a new daily service to Mexico City this week, flying via Barcelona from Dh3,995.
Emirati citizens are among 67 nationalities who do not require a visa to Mexico. Entry is granted on arrival for stays of up to 180 days.
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Defence review at a glance
• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”
• Prioritise a shift towards working with AI and autonomous systems
• Invest in the resilience of military space systems.
• Number of active reserves should be increased by 20%
• More F-35 fighter jets required in the next decade
• New “hybrid Navy” with AUKUS submarines and autonomous vessels
MANDOOB
Our commentary on Brexit
- Alistair Burt: Despite Brexit, Britain can remain a world power
- Sam Williams: Departure is influenced by its sense of place
Plastic tipping points
While you're here
Con Coughlin: To survive, Nato must renew its sense of common purpose
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The national orchestra
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
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National Editorial: Suleimani has been killed, now we must de-escalate
Mina Al Oraibi: Air strike casts a long shadow over the decade ahead
Jack Moore: Why the assassination is such a monumental gamble
Matthew Levitt: Iran retains its ability to launch terror attacks
Damien McElroy: A CEO tasked with spreading Iran's influence
Hussein Ibish: Trump's order on solid constitutional ground
Simon Waldman: Cautious Israel keeping a low profile
Rashmee Roshan Lall: Sound of silence in South Asia
Fanar Haddad: The Iranian response will be gradual
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National Editorial: Suleimani has been killed, now we must de-escalate
Mina Al Oraibi: Air strike casts a long shadow over the decade ahead
Jack Moore: Why the assassination is such a monumental gamble
Matthew Levitt: Iran retains its ability to launch terror attacks
Damien McElroy: A CEO tasked with spreading Iran's influence
Simon Waldman: Cautious Israel keeping a low profile
LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
World Series
Game 1: Red Sox 8, Dodgers 4
Game 2: Red Sox 4, Dodgers 2
Game 3: Saturday (UAE)
* if needed
Game 4: Sunday
Game 5: Monday
Game 6: Wednesday
Game 7: Thursday
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• Architecture is over - here's cybertecture
• The National announces Future of News journalism competition
• Round up: Experts share their visions of the world to come
Brief scores:
Toss: Northern Warriors, elected to field first
Bengal Tigers 130-1 (10 ov)
Roy 60 not out, Rutherford 47 not out
Northern Warriors 94-7 (10 ov)
Simmons 44; Yamin 4-4
The%20specs
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Tomorrow 2021
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MATCH INFO
Uefa Champioons League semi-final:
First leg: Liverpool 5 Roma 2
Second leg: Wednesday, May 2, Stadio Olimpico, Rome
TV: BeIN Sports, 10.45pm (UAE)
World Mental Health Day
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Tomorrow 2021
SERIES INFO
Afghanistan v Zimbabwe, Abu Dhabi Sunshine Series
All matches at the Zayed Cricket Stadium, Abu Dhabi
Test series
1st Test: Zimbabwe beat Afghanistan by 10 wickets
2nd Test: Wednesday, 10 March – Sunday, 14 March
Play starts at 9.30am
T20 series
1st T20I: Wednesday, 17 March
2nd T20I: Friday, 19 March
3rd T20I: Saturday, 20 March
TV
Supporters in the UAE can watch the matches on the Rabbithole channel on YouTube
Ultra processed foods
- Carbonated drinks, sweet or savoury packaged snacks, confectionery, mass-produced packaged breads and buns
- margarines and spreads; cookies, biscuits, pastries, cakes, and cake mixes, breakfast cereals, cereal and energy bars;
- energy drinks, milk drinks, fruit yoghurts and fruit drinks, cocoa drinks, meat and chicken extracts and instant sauces
- infant formulas and follow-on milks, health and slimming products such as powdered or fortified meal and dish substitutes,
- many ready-to-heat products including pre-prepared pies and pasta and pizza dishes, poultry and fish nuggets and sticks, sausages, burgers, hot dogs, and other reconstituted meat products, powdered and packaged instant soups, noodles and desserts.
The%20Secret%20Kingdom%20
While you're here
Michael Young: Where is Lebanon headed?
Kareem Shaheen: I owe everything to Beirut
Raghida Dergham: We have to bounce back
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Shelina Janmohamed: Why shouldn't a spouse be compensated fairly for housework?
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Justin Thomas: Challenge the notion that 'men are from Mars, women are from Venus'
Scoreline:
Barcelona 2
Suarez 85', Messi 86'
Atletico Madrid 0
Red card: Diego Costa 28' (Atletico)
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Dr Nawal Al-Hosany: Why more women should be on the frontlines of climate action
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Saudi National Day
Graduated from the American University of Sharjah
She is the eldest of three brothers and two sisters
Has helped solve 15 cases of electric shocks
Enjoys travelling, reading and horse riding
