Thursday, 5 June 2014

And There It Is: The St. Louis Fed Financial Stress Index At Lowest Level Ever

According to numbers just released by the Fed, the St. Louis Financial Stress Index, which measures the degree of financial stress in the markets, just hit the lowest level ever reported. 

As values below zero suggest below-average financial market stress, the current all-time low reading at -1.281 suggests financial stress in the U.S. markets has never been lower based on data going back to December 1993. 

Combined with U.S. stock markets hitting new records highs, this is not the time for equity investors with long positions to be complacent. 

Interesting to note that "The largest negative contribution [for this weeks index numbers] was made by the expected inflation rate over the next 10 years" and "The largest positive contribution was accounted for by the yield spread between high-yield corporate bonds and 10-year Treasury securities". Read the full press release here.