As we head into the FOMC Wednesday meeting, the U.S. Financial Conditions Index seems to have bounced back from its recent lows. This means monetary conditions have not continued to tighten, the index is now back to the same levels where we were in May, last read at -106
As we can see in the panel below, some indicators (spreads) remain well within the average seen over the last year. The VIX at 26.5 and the recent rebound in the S&P 500 index to 3,900 has not helped the Fed's campaign. While high-yield/10-yr spread at 4.55 is just above its one-year average
Alternative indicators like the BofA's Financial Stress Index point to the same development, conditions remain relatively easy
Despite conditions having dropped almost 200bps this year alone, tightening has been more evident in the eurozone and U.K. equivalents. All of this could be interpreted as the Fed's work is not done
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