Financial Market Stress Increases Modestly from Previous Week's Record Low

The St. Louis Fed Financial Stress Index (STLFSI) increased modestly from the previous week’s record low. This was the first increase in four weeks. For the week ending July 4, 2014, the STLFSI measured -1.351, up slightly from the previous week’s revised value of -1.377. Despite the increase, the STLFSI is still below its year-to-date average of -1.206.

Over the past week, 10 of the 18 indicators contributed positively to the weekly change in the STLFSI, while two contributed negatively. The largest positive contribution was made by the Merrill Lynch Bond Market Volatility Index (Mlynch_BMVI_1mo), followed by the Merrill Lynch High-Yield Corporate Master II Index (Mlynch_HighYld_MasterII). The largest negative contribution was made by the Chicago Board Options Exchange Market Volatility Index (VIX), followed by the S&P 500 Financials Index (SP500_FI).

Over the past 52 weeks, 15 of the 18 indicators contributed negatively to the change in the STLFSI, while two contributed positively. The largest negative contribution over the past year was made by the Mlynch_BMVI_1mo, followed by the VIX. The largest positive contribution was made by the Treasury yield curve (YieldCurve_10yr3mo), followed by the 10-year Treasury yield (Treas10y). The STLFSI was below its year-earlier level for the eighth consecutive week.

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