Fed Policy and Bank Stress Tests
The Federal Reserve influences several factors that may impact investors in a critical sector of the economy: large financial institutions.
Many investors count on large banks for dividend income and stable, diversified growth in an environment defined by technological disruption and general uncertainty. Within the context of recent macroeconomic developments, the Fed will take steps to analyze “banks’ ability to withstand various coronavirus-related recession scenarios as it forms policy on capital requirements, dividends and stocks buybacks,” as noted in this WSJ article.
Investors should be aware of bank stress test developments as the Fed makes decisions that may impact the risk/return profile of a globally diversified portfolio.
Read more here: https://www.wsj.com/articles/fed-to-conduct-sensitivity-analysis-of-banks-for-covid-19-scenarios-11592582629
