The prospect of a partial shutdown of the federal government and the possibility the situation would not be quickly resolved added to financial market stress in recent week. However, there is some clarity to be had in the knowledge that it will in fact last for some time. As such, financial market stress eased a bit in the January 7 week.
The St. Louis Fed’s Financial Stress Index – which is published weekly – slipped to -0.667 in the January 7 week, retracing some of last week’s increase. In any case, the reading is well below the zero-mark that would signal the emergence emergence of substantive strains. For the moment, there appears to be no fundamental deterioration in financial conditions.
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