"Escalating Concerns: Commercial Real Estate Woes Trigger Systemic Risk for Banks"

Money managers are increasingly concerned about the potential for a systemic credit event as real estate market turmoil raises alarms globally. The deepening disquiet in US commercial real estate and Chinese property markets has become the third-biggest worry for respondents in a recent survey, trailing higher inflation and geopolitics. Fears were compounded by stronger-than-expected inflation numbers, denting hopes for Federal Reserve interest rate cuts to alleviate real estate pressure. Smaller banks are particularly vulnerable to the downturn in commercial real estate, with concerns about potential solvency runs and default rates. The Fed is coordinating with lenders to work through expected losses, but nearly 40% of fund managers see US commercial real estate as the most likely source of a credit event.