Financial Stress Just Hit A Record Low - Here's Why You Should Worry

As the stock market climbed to new highs this past week, U.S. financial stress hit a record low according to the St. Louis Fed’s Financial Stress Index. The index is comprised of eighteen weekly data series such as interest rates, yield spreads, and sentiment indicators that act as barometers for the health of the U.S. financial system. An index reading of zero implies that financial conditions are normal, while a positive reading indicates that the financial system is experiencing some degree of stress. At the height of the Global Financial Crisis in 2009, the index’s value hit a record of over six.