The St. Louis Fed’s Financial Stress Index indicated that whatever stresses started to build in early October have largely worked their way through financial markets. The index reading for the week ended March 1 was -1.216, the lowest since -1.251 in October. The prospect of further short-term rate hikes out of the Federal Reserve has receded and the troubles in equities markets in November and December have seen lost ground by-and-large made up. A possible inversion of the yield curve has retreated as longer-term yields have risen, although 2- and 5-year Treasury yields remain quite close.
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