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The Boston Globe

Business

Fed offial warns of overheated debt markets

WASHINGTON — Some credit markets are showing signs of overheating as investors take larger risks in response to the persistence of low interest rates, a senior Federal Reserve official said Thursday.

The official, Fed governor Jeremy Stein, highlighted a surge in junk bond issues, the popularity of certain kinds of real estate investment trusts, and shifts in bank balance sheets as areas the central bank is watching closely, although he downplayed any immediate threat to the financial system or the economy.

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