Moreover, money and credit have been quite weak, suggesting that asset price movements have not been fueled by increased leverage that would leave financial intermediaries vulnerable to a reversal of recent gains.
The improvement in the spreads and functioning of securities markets has not been accompanied by any loosening of very tight credit conditions for bank credit; indeed, banks have continued to tighten terms and standards in recent months, albeit at a slowing rate. Still, my current assessments could be wrong – asset prices may in fact be in the process of rising excessively.