Financial Market Stress Rises for Third Consecutive Week

The St. Louis Fed Financial Stress Index (STLFSI) rose for the third consecutive week. For the week ending July 18, 2014, the STLFSI measured -1.330, up modestly from the previous week’s revised value of -1.357.

Over the past week, eight of the 18 indicators contributed positively to the weekly change in the STLFSI, two more than the previous week. The largest positive contribution was made by the expected inflation rate over the next 10 years (BIR_10yr), followed by the spread between yields on high-yield corporate bonds and 10-year Treasury securities (HighYield_CRS). Seven indicators contributed negatively to the change in the STLFSI over the past week, which was two fewer than the previous week. The largest negative contribution was made by the Merrill Lynch Bond Market Volatility Index (Mlynch_BMVI_1mo).

Over the past 52 weeks, 14 of the 18 indicators contributed negatively to the change in the STLFSI, three fewer than the previous week, and only one indicator contributed positively to the index. The largest negative contribution over the past year was made by the Mlynch_BMVI_1mo, followed by the yield spread between Baa-rated corporate bonds and 10-year Treasury securities (Corp_CRS). The STLFSI was below its year-earlier level for the 10th consecutive week and below zero for the 135th consecutive week.

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