The International Monetary Fund issued a warning on Tuesday about complacency in global financial markets, highlighting risks from an artificial intelligence-driven selloff, rising government bond yields, or cyberattacks as potential threats to resilient markets. According to the IMF’s Global Financial Stability Report, AI investments have offset economic drags from the Middle East war and policy uncertainty, but evidence suggests AI capabilities may not require as much investment or deliver the expected economic gains.
AI Market Correction Risks
An AI market correction could impact the real economy, said Athanasios Vamvakidis, deputy director in the IMF’s Monetary and Capital Markets Department, during a press briefing in Bangkok. While global risk sentiment remains strong due to solid earnings and AI optimism, resilience does not equal safety, he cautioned. Any AI correction might trigger wealth and investment impacts that spill into broader markets.
The IMF identified AI-driven selloff, sovereign bond yield spikes, and major cyberattacks as plausible near-term catalysts requiring policymaker attention. Alone, these risks may be manageable, but together they could create systemic vulnerabilities, Vamvakidis noted. Should AI investment momentum slow, growing sector leverage could exacerbate shocks through forced selling and higher volatility. Hyperscalers now account for 10% of global investment-grade bond issuance, up from less than 1% in 2024.
The IMF warned that AI correction consequences could be global, urging policymakers to curb excessive leverage in derivatives and margin loans. The report highlighted that while AI can address some cyber risks, its models are also making attacks more sophisticated. A major cyberattack on a critical service or financial institution could quickly erode market confidence, the IMF said.
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Bond Market Pressures
Bond market risks have worsened since April, driven by higher energy prices pushing government bond yields up, according to the IMF. Historically high sovereign debt and unresolved fiscal deficits in major economies add pressure. The market worries about absorbing massive upcoming issuance from sovereigns and the private sector as central banks shrink their balances, relying more on price-sensitive investors, Vamvakidis explained.
Despite stress, bond markets have managed well, with hedge funds unwinding repurchase agreement borrowing without causing repo market turmoil, the report stated. The IMF called for sustainable public debt policies from policymakers.
Cybersecurity Vulnerabilities
Cyber defenses face challenges, especially in emerging markets lacking resources and relying on few critical providers, the IMF noted. In over 70% of 2026 cases, software providers had almost no time to patch vulnerabilities before exploitation—a 20 percentage point increase from 2025. The IMF recommended boosting cybersecurity capacity and stricter oversight of third-party vendors.
Banking Sector Stress Tests
The IMF’s stress tests showed banks’ capital cushions remain robust even in a downturn triggered by AI slowdown and bond market fragility. However, 22% of global banking assets were found to have weak capital levels under the test, up from 18% in 2025.
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