“A tightening of supply could also affect relatively more resilient borrowers reliant on private-market finance, including UK corporates, especially as UK private markets are heavily dependent on overseas investors,” it said. Market participants should, it added, have a “clear understanding of their direct and indirect exposures to risky credit markets.”  At the same time, fears that the record-high prices of AI-focused stocks could collapse and send ripples through the financial system have persisted, with the FPC highlighting that valuations for U.S. tech firms focused on AI remain “particularly stretched.” “Despite the volatility that the conflict has generated, risk premia in global equity and debt markets remain compressed by historical standards, heightening the risk of a sharp correction if macroeconomic conditions worsen,” said the committee. “AI-related repricing could transmit widely throughout the financial system and impact the real economy.” Finally, the FPC warned that existing sovereign debt vulnerabilities could be worsened by the conflict, as “a relatively high use of leverage by a small number of hedge funds pursuing similar strategies” risked causing stress on the …