Financial market stress remains relatively low

Despite a slight tick upward, financial market stress remains relatively low from a long-term perspective. For the week ending Nov. 29, 2013, the St. Louis Fed Financial Stress Index (STLFSI) measured -0.845, modestly higher compared with the previous week. Over the past four weeks (including the current week), the STLFSI averaged -0.834, the lowest four-week average since the four weeks ending May 31, 2013.

Over the past week, nine of the 18 indicators contributed positively to the change in the STLFSI, while six indicators registered negative contributions. The largest positive contribution over the past week 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 Baa-rated corporate bonds and 10-year Treasury securities (Corp_CRS).

For the fourth week in a row, 12 of the 18 indicators contributed negatively to the change in the STLFSI over the past 52 weeks, while six indicators contributed positively to the index. For the fifth consecutive week, the spread between yields on high-yield corporate bonds and 10-year Treasury securities (HighYield_CRS) made the largest negative contribution to the STLFSI. For the 11th 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.