Financial Market Stress Decreases for the First Time in Four Weeks

Financial market stress declined for the first time in four weeks. For the week ending March 28, 2014, the St. Louis Fed Financial Stress Index (STLFSI) measured -1.060, down from a revised -1.038 over the previous week.

Over the past week, 10 of the 18 indicators contributed negatively to the weekly change in the STLFSI, the same number as the previous week. The largest negative contribution was made by the spread between Baa-rated corporate bonds and 10-year U.S. Treasury securities (Corp_CRS). The second-largest negative contribution was made by the Merrill Lynch Bond Market Volatility Index (Mlynch_BMVI_1mo). Six of the 18 indicators contributed positively to the weekly change in the STLFSI over the past week. The largest positive contribution was made by the expected inflation rate over next 10 years (BIR_10yr).

Over the first 13 weeks of 2014, the STLFSI has averaged -1.022, up slightly from its average over the same period in 2013 (-1.062). Over the past 52 weeks, 10 of the 18 indicators contributed positively to the change in the STLFSI, one more than last week, while eight indicators contributed negatively to the index. Thus far in 2014, the BIR_10yr has made the largest positive contribution to the STLFSI. For the 12^th consecutive week, the largest negative contribution over the past year was made by Corp_CRS.

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