Concerns are growing that the rapid expansion of private credit without improved disclosure could lead to systemic risks amid economic uncertainty. US retail investors have fuelled a $350 billion surge in the sector via semi-liquid funds, a report from Morningstar notes.
Global M&A hit $2.14 trillion in the first half of 2025, driven by a surge in $10 billion-plus deals and record activity in Asia, despite headwinds from tariffs and high rates. Bankers see renewed optimism for H2 as volatility eases and U.S. policy shifts open the door to larger transactions.
Corporate distress in Europe has reached its highest level in nine months, according to the Weil European Distress Index. The index, which tracks data from more than 3,750 listed companies, rose to 4.1 in the three months through May from 3.8 in the previous period. The retail and consumer goods sectors are particularly affected, with distress levels at their highest since 2009.
Hedge funds are aggressively recruiting AI and machine learning engineers, offering lucrative pay packages to attract top talent. The hiring spree reflects a broader push to integrate advanced technology into investment strategies and gain an edge over competitors.
US middle-market private equity firms are showing renewed optimism for a dealmaking revival by early 2026, driven by increased deal flow and expectations of lower interest rates. "This month, we're getting deal flow that's about 70 percent ahead of June last year," says Randy Schwimmer of Churchill Asset Management.
The BIS sees the repo market as the "next natural setting" for tokenization, enabling seamless settlement and payments on a single programmable platform. "It could transform securities markets and is especially promising for correspondent banking," says Hyun Song Shin.
And investor coalition has warned Senate Republicans that Section 899 of the House-passed tax and spending bill could drive foreign investors away from US markets. They said the provision, which targets passive income from countries with "unfair" taxes, risks triggering a sell-off and destabilising US public and private markets.
The Federal Reserve announced that all 22 major US banks passed its 2025 stress test, indicating they could withstand a hypothetical severe recession. This year's scenario was less severe than in 2024, reflecting shifts in global economic conditions and adjustments to the Fed's testing approach.
Financial Conduct Authority chief executive Nikhil Rathi has called for greater transparency around hedge fund activity in the UK government bond market, warning that their growing presence – now accounting for 27% of weekly gilt trading, up from 17% in 2018 – could pose risks to market stability.
The European Securities and Markets Authority has launched a public consultation aimed at overhauling complex and costly financial transaction reporting under MiFIR, EMIR, and SFTR. Proposals include eliminating duplication or introducing a unified "report once" framework, as part of the EU's broader effort to reduce regulatory burdens by 25%.
The European Commission plans to introduce new rules for stablecoins, treating those issued outside the EU as equal to domestic ones. The move would clarify a lack of legal certainty around their status. ECB President Christine Lagarde has warned this could threaten financial stability, particularly during market shocks, but the Commission says the risks are manageable.
