St. Louis Fed Financial Stress Index
One number for how much strain the financial system is under. Zero is average stress; positive means tighter than normal, negative means looser.
History
What goes into the index
['The St. Louis Fed builds the index from eighteen weekly series in three groups: seven interest rates (including the effective federal funds rate, Treasury and corporate spreads, and the Treasury-Eurodollar spread), six other yield spreads, and five measures of financial market volatility and behaviour.
', 'Each input is standardised, then the first principal component is extracted and rescaled so that zero equals the average level of stress over the sample. One number, one axis, no judgement about which spread matters this week.
']Why a composite beats a single spread
['A credit spread tells you what corporate bond investors think. A volatility index tells you what options markets think. Neither is complete, and in a fast-moving episode one can lag the other by days. A composite moves when stress appears anywhere in the system.
', 'The trade-off is that a composite hides which channel is stressed. When the index spikes, the next question is always "which input did it" — and this page does not answer that. Read it as a smoke detector, not a diagnosis.
']The historical episodes
['The index reached its highs in 2008 and again in March 2020, when the pandemic shutdowns produced a dash for cash across every funding market at once. Both peaks were followed by extraordinary policy intervention, which is part of why the index falls so quickly afterwards.
', 'Negative readings are common and not a signal by themselves: the 2010s and much of the 2020s sat below zero for extended stretches. What matters is the direction of change — a move from −0.6 to +0.4 in a few weeks is a warning even if the level is still moderate.
']How we calculate it
["We publish STLFSI4 as-is from FRED. It is weekly, released on Fridays with a one-week lag. No transformation, no smoothing. The percentile is the share of weekly observations since December 1993 below today's reading.
", 'Because zero is defined as the sample average, the percentile and the level usually agree — but not perfectly, since the distribution is right-skewed by 2008 and 2020.
']Distribution since 1993
Each row is the share of historical observations at or below that level. A reading in the 90th percentile is higher than nine tenths of the record.
Important
Not investment advice. This page is published for information and education only. It is not a recommendation, solicitation, or offer to buy or sell any security. Market data may be delayed, incomplete, or revised. Indicators describe the past; they do not forecast returns. Past performance does not guarantee future results. Do your own research or consult a licensed financial professional before acting on anything you read here.
Questions
What does a negative reading mean?
Stress below the long-run average — not "no stress", but looser financial conditions than the sample average. It has been the normal state for most of the past fifteen years.
Is it updated daily?
No. The index is weekly, published on Fridays for the week ending the prior Friday, so there is always a lag of roughly one week.
Can I use it to time the market?
It is a coincident indicator of financial conditions, not a forecast of returns. Spikes have historically been better buying opportunities than selling signals, but the sample is small.
Why is the latest stretch of the chart locked?
The current reading and the full history are free. The most recent weeks are member-only.