Financial system is strong, but vulnerabilities remain, Fed says in report

Overall, the financial position of many U.S. households has continued to improve since December, but household credit growth "has been almost exclusively among prime-rated borrowers," the the Federal Reserve said in its semi-annual Monetary Policy Report to Congress. "Nonetheless, some households remained financially strained and vulnerable to adverse shocks during this period of heightened uncertainty," the central bank said. Some other highlights from the report: Vulnerabilities from financial-sector leverage remain well within their historical range. "Funding risks at domestic banks and broker-dealers are low, but structural vulnerabilities persist at some money market funds ("MMFs"), bond funds, and stablecoins." MMFs remain a "structural vulnerability due to their susceptibility to runs." The SEC has proposed reforms to MMFs that are designed to make them more resilient to redemptions. Elevated market volatility, particularly in commodity markets, caused central counterparties to make larger margin calls. To date, clearing members have been able to meet them. Its survey