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St. Louis Fed’s Financial Stress Index for December 6 week slightly less comfortable

The St. Louis Fed’s Financial Stress Index for the week ended December 6 was slightly less comfortable at -1.333 after -1.380 in the prior week. The change was not significant. It remains consistent with conditions in which stresses are distant. Equities markets continue to gain and Treasury yields to reflect a steady outlook for monetary policy and growth.

The Wednesday weekly average for Treasury yields showed the gap between 3-month bills and 10-year notes rose to 26 basis points and has remained positive for eight straight weeks. The gap between 2-year and 10-year notes widened to 21 basis points as has been positive for 14 weeks. Fed policymakers tend to look more at the latter than former as a recession signal. It indicated that the threat of recession is retreating and could be another reason that the FOMC decided to pause on further rate moves for the present.

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