The St. Louis Fed’s Financial Stress Index fell to -1.311 in the April 12 week, the lowest since -1.313 in the February 2, 2018 week. Financial markets seem to have taken the downgrade in the FOMC’s forecasts as a sign that the Fed and markets were in better agreement on the economic outlook, and resulted in less sense that the Fed will remove interest rate accommodation any time soon. The initial steps in bringing the balance sheet normalization to a close also seem to have been taken in stride.
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