Lack of progress in trade talks with China and anticipation of another round of punitive tariffs combined with concerns about slower overall global growth to make the St. Louis Fed’s Financial Stress Index to turn less sanguine in the May 10 week. By no means are conditions anything but consistent with low stress. However, the sense that the US economy is facing increases risks intensified. The index rose to -1.263 in the May 10 week after a fifteen month low of -1.352 in the May 3 week.
The current week’s news that tariffs were actually going to be imposed and that China planned to retaliate, along with other negative geopolitical news will not improve next week’s reading.
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