Financial market stress increases from previous week

Financial market stress was little changed from the previous week and remained below its historical average (zero) for the 73rd consecutive week. For the week ending Nov. 8, 2013, the St. Louis Fed Financial Stress Index (STLFSI) measured -0.777. Over the past four weeks, the STLFSI has averaged -0.771, modestly lower than its average over the previous four weeks (-0.611).

Over the past week, about the same number of indicators contributed positively (nine components) to the change in the STLFSI as contributed negatively (eight components). In contrast with the previous two weeks, the largest positive contribution was made by the Merrill Lynch bond market volatility index (Mlynch_BMVI_1mo). The largest negative contribution over the past week was made by the spread between high-yield corporate bonds and the 10-year Treasury securities (HighYield_CRS).

Over the past 52 weeks, 12 of the 18 indicators contributed negatively to the change in the STLFSI, while six indicators contributed positively to the index. Over this period, the HighYield_CRS made the largest negative contribution to the STLFSI. For the eighth consecutive week, the largest positive contribution was made by the expected inflation rate over the next 10 years (BIR_10yr).

For an explanation of the 18 component variables in the STLFSI, refer to the STLFSI Key.