The Federal Reserve released a financial stability report. According to the report, market participants and observers believe that in the face of continued inflation, higher than expected interest rates are the biggest threat to financial stability. The report includes findings on financial market linkages and the central bank's risk assessments in four main areas, including asset valuation, corporate and household borrowing, and financial sector leverage and financing risk. Although “the banking industry has remained stable and resilient in general, and most banks continue to report capital levels far above regulatory requirements”, the Federal Reserve stated, “Available data shows that the leverage ratio of hedge funds has risen to a record high, mainly driven by large hedge fund loans.