In spite of near universal confidence that the FOMC will deliver a rate cut at the upcoming July 30-31 meeting, there were indications that low levels of stress were not quite as sanguine about conditions as they had been two weeks ago.
The St. Louis Fed’s Financial Stress Index rose to -1.334 in the week ended July 19, up from -1.359 in the July 12 week and the near-term low of -1.376 in the July 5 week.
Markets may be a trifle less easy in regard to conditions for leveraged corporate debt, a speedy conclusion to trade talks with China, conditions for the global financial markets as the outcome of Brexit looks more contentious with the prospect of Boris Johnson as Prime Minister, and see-sawing tensions with Iran. However, the potential for outright recession at home seems to have faded as the US economic data remains generally positive, if more volatile month-to-month.
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