The St. Louis Fed’s Financial Stress Index for the week ended November 1 fell to -1.324, a sharp improvement from the -1.285 in the prior week and the lowest since -1.349 in the August 2 week.
In spite of the FOMC dashing hopes of further rate cuts in the near future after the third one announced on October 30, stresses were even lower after a strong employment report for October and other data and developments that pointed to no recession in the near future.
Equity markets hit new highs and spreads for Treasury yields widened a bit more.
The spread between the 3-month bill and 10-year note was 22 basis points, a third week in a row for a positive and the widest since 22 basis points in the March 8 weekly average. The 2-year/10-year note spread — which Fed policymakers tend to pay more attention to — widened to 19 basis points, its largest since 23 basis points in the July 26 week.
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