The St. Louis Fed’s Financial Stress Index retreated for a second week, falling to -1.215 in the week ended October 18 after -1.184 in the prior week. It still hasn’t regained all the ground it lost since mid-September, but it suggested that improvement was ongoing. Stock markets had gains, the Fed purchases of Treasury bills contributed to a positive spread for the 3-month yield compared to the 10-year note for the first time in 12 weeks (13 basis points) and the spread between the 2-year note yield and 10-year continued to widen (17 basis points, widest since 17 basis points in Wednesday average of August 2). Confidence that the FOMC will cut rates again at the October 29-30 meeting got a bit of a boost with softer economic data, although it is by no means a certainty.
Disclaimer: Whetstone Analysis provides commentary as a service to its subscribers. Whetstone Analysis is not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained within the site. While the information contained within the site is periodically updated and every effort is made to ensure its accuracy, no guarantee is given that the information provided in this Web site is correct, complete, and up-to-date. Click here to read our full Disclaimer.