Financial Market Stress Declines for Third Straight Week


St. Louis Fed Financial Stress Index Chart

Financial market stress tracked lower for the third consecutive week according to the St. Louis Fed Financial Stress Index (STLFSI). From the week ending Feb. 21, 2014, to the week ending Feb. 28, 2014, the STLFSI fell from -0.989 to -1.038. Through the first nine weeks of 2014, the STLFSI has averaged -0.978, a slight increase from the same nine-week period in 2013 (-1.007).

 weekly change

Over the past week, 14 of the 18 indicators contributed negatively to the weekly change in the STLFSI, while only two indicators contributed positively. The largest negative contributions over the past week were made by the expected inflation rate over the next 10 years (BIR_10yr) and the Chicago Board Options Exchange Market Volatility Index (VIX). The two positive contributions, which were negligible, were made by the yields on 10-year and 30-year Treasury securities.

  yearly change

Financial market stress was below its year-earlier level. Over the past 52 weeks, 10 of the 18 indicators contributed positively to the change in the STLFSI and eight contributed negatively. This was the same as the previous week. Also similar to last week, the largest positive contribution over the past year was made by the BIR_10yr and the largest negative contribution was made by the spread between Baa-rated corporate bonds and 10-year Treasury securities (Corp_CRS).

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