The Financial Stress Index Just Hit An All-Time Low

Myles UdlandJun 20, 2014, 00:31 IST

REUTERSA trader on the floor of the New York Stock Exchange rubs his temples July 29, 1999 as stocks plunged after economic data showed a steep rise in wage costs and intensified speculation the Federal reserve may again raise interest rates. In late afternoon trading the Dow Jones industrial average was off 216.56 points at 10,755.51.

Stress on Wall Street is nowhere to be found.

The St. Louis Fed today announced that its Financial Stress Index fell to an all-time low for the second time in three weeks.

The index is based on 18 data series, which include interest rates and the spread between certain interest rate-sensitive securities or benchmarks. A reading of 0 represents normal financial market conditions.

The index, measured on a weekly basis, dates back to 1993.

Here's what it looks like in chart form.

Federal Reserve Bank of St. Louis

This reading is just the latest in a series of indicators showing how and why things are so quiet in the market. And this trend does not appear to be going away.

Last night, the VIX hit a new low for the year. We recently chronicled why volatility is down here.

Yesterday, the Federal Reserve held steady on monetary policy, and now the economy looks primed for a rebound in the second half of the year.

Here we go.

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The Financial Stress Index Just Hit An All-Time Low