In the second half of 2025 and into early 2026, equity valuations reached record highs, underscoring mounting risks of unsustainable pricing and disorderly corrections that could reverberate across markets, even after a modest subsequent retreat. The October crypto flash crash dampened exuberance in crypto markets, yet valuations remain at elevated levels. Private credit emerged as a systemic vulnerability following US defaults highlighting opacity and systemic interlinkages. Debt sustainability concerns grew in both the EU and U.S. on the back of rising public deficits. Cyber and hybrid threats remained elevated, increasing the risk of severe disruptions to market infrastructure and amplifying systemic vulnerabilities. These market developments collectively contributed to keep risks of market and systemic stress elevated, particularly given the backdrop of evolving geopolitics and continuing uncertainty. […]