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On the radar: St. Louis Fed Financial Stress Index continued its slow movement higher in September 27 week

The St. Louis Fed’s Financial Stress Index continued its slow movement higher in the week ended September 27, rising to -1.271 after -1.284 in the prior week. It would take quite a stretch to say that markets are stressed in the historical context, but gyrations in stock market, sudden and unusually strong changes in bond yields, and worries about a possible recession are causing some discomfort to creep in.

After two weeks of improvement the basis point spread between the 3-month/10-year yields widened again although it is less severe that it has been among the readings of the past nine weeks. The 2-year/10-year spread — to which Fed policymakers pay more attention — remained positive for a fourth straight week, although the spread is quite narrow.

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