Soaring levels of debt issuance among tech companies have Wall Street on edge, but staff economists at the Federal Reserve aren’t that concerned yet.
The minutes released Wednesday from the Fed’s policy meeting last month revealed other risks that drew more concern, including stock prices.
“The staff judged that asset valuation pressures were elevated,” the Fed said. “Price-to-earnings ratios for public equities stood at the upper end of their historical distribution, reflecting, in part, expectations of strong earnings growth for technology firms and elevated risk appetite among investors.”
By contrast, Fed staff characterized vulnerabilities from nonfinancial businesses as “moderate,” ratcheting down from the more urgent “elevated” label.
Corporate debt has grown in the past few years, especially among publicly traded companies with investment-grade ratings, the minutes said.
