Financial conditions
How tight or loose is the financial system right now
One composed read on US and cross-country conditions: a transparent Financial Conditions Index against its own history, the Treasury yield curve and its inversions, the Basel III credit-to-GDP gap and credit impulse, the daily global stress indices (the U.S. Treasury OFR FSI and the ECB CISS), and the official Fed stress indices. Everything is built on open primary sources (FRED, BIS, the OFR, the ECB), with every series traceable to source. These are historical descriptive measures, not investment advice.
- -0.68
- FinObservatory FCI
- Loose, 33rd pctl since 1991
- +0.51 pp
- 10y-2y Treasury slope
- positive, Aug 14, 2026
- -0.55
- Chicago Fed NFCI
- official, loose, Aug 7, 2026
- -11.5 pp
- US credit-to-GDP gap
- Basel III: normal, 2025Q4
Data as of Mar 31, 2026 (FinObservatory FCI)
Financial conditions
Financial conditions are loose at the 33rd percentile
Quarterly US composite in standard deviations, 1991–2026. A PCA-weighted z-score of eight credit, curve, survey and market indicators, standardized to mean 0 and standard deviation 1, higher = tighter. The latest reading is -0.68 (Mar 31, 2026), looser than about 67% of all quarters. Its one extreme tight regime is the 2008–2011 global financial crisis. Shaded bands are NBER recessions.
Source: FinObservatory macro engine (absorbed from argus), driven unmodified | FRED, Federal Reserve Bank of St. Louis Methodology
What is driving the latest reading
The eight component z-scores at the latest quarter (positive = pushing conditions tighter, negative = looser). Low credit spreads and low mortgage delinquencies are the main loosening forces.
| Component | z-score | Pushing |
|---|---|---|
| term_spread_10y3m | +0.75 | tighter |
| term_spread_10y2y | +0.44 | tighter |
| fed_funds | +0.41 | tighter |
| vix | +0.15 | tighter |
| real_credit_growth | +0.06 | tighter |
| sloos_ci_tightening | -0.02 | looser |
| delinq_all | -0.65 | looser |
| baa_aaa_spread | -0.83 | looser |
Source: FinObservatory macro engine (absorbed from argus), driven unmodified | FRED, Federal Reserve Bank of St. Louis Component z-scores over the full 1991Q1-2026Q1 sample; three components sign-inverted so higher always = tighter. Methodology
The Treasury yield curve
The Treasury curve is positive again as of Aug 13, 2026
The current curve of constant-maturity Treasury yields (as of Aug 13, 2026), and the 10-year-minus-2-year slope back to 1976, in percent and percentage points. The slope is currently +0.51 pp (positive).
The Treasury yield curve
Every recession in this sample followed a yield-curve inversion
Credit: the Basel III gap and the credit impulse
US private credit remains far below its long-run trend
The credit-to-GDP gap is the deviation of private non-financial credit from its long-run trend, the Basel III anchor for the countercyclical capital buffer. The credit impulse is the acceleration of that credit, which tends to lead GDP. The US gap is currently -11.5 pp (normal), far below trend after the post-2008 and post-2020 deleveraging.
Source: FinObservatory macro engine (absorbed from argus), driven unmodified | BIS credit statistics Methodology
Credit: the Basel III gap and the credit impulse
The credit impulse plunged during the 2008 deleveraging
Source: FinObservatory macro engine (absorbed from argus), driven unmodified | BIS credit statistics Methodology
Credit-to-GDP gap across major economies, latest quarter
Where each of the nine BIS-covered major economies sits against its own long-run credit trend. Only Japan is currently above the Basel III watch threshold; the rest are all well below trend.
| Economy | Gap (pp) | Basel III signal | As of |
|---|---|---|---|
| JPN Japan | +6.8 | ELEVATED | 2025Q4 |
| DEU Germany | -4.0 | NORMAL | 2025Q4 |
| CHN China | -7.7 | NORMAL | 2025Q4 |
| KOR South Korea | -8.0 | NORMAL | 2025Q4 |
| AUS Australia | -9.9 | NORMAL | 2025Q4 |
| USA United States | -11.5 | NORMAL | 2025Q4 |
| FRA France | -15.1 | NORMAL | 2025Q4 |
| CAN Canada | -15.3 | NORMAL | 2025Q4 |
| GBR United Kingdom | -17.8 | NORMAL | 2025Q4 |
Source: FinObservatory macro engine (absorbed from argus), driven unmodified | BIS credit statistics Engine gap (== BIS published gap) on the BIS private-non-financial-sector credit-to-GDP ratio. Bangladesh is absent from BIS's ~43-economy set. Methodology
The US credit cycle: loan demand, standards, and sectoral debt
Post-Lehman brought the sharpest tightening in the survey record
Quarterly US net percentages of banks, 1990–present. Two views of the same cycle. The Fed’s quarterly Senior Loan Officer Opinion Survey (SLOOS) reads the bank lending channel from both sides: loan demand (the net percentage of banks reporting stronger demand for commercial and industrial loans) against lending standards (the net percentage tightening them). The Z.1 Financial Accounts track the debt stock that cycle leaves behind, by sector, back to 1945. As of 2026Q2, large and middle-market C&I demand reads +4.8 (net % of banks); total US debt securities and loans outstanding stand at $115.6 trillion (2026Q1).
Demand and standards are distinct questions: banks reporting weaker demand tell you borrowers are pulling back; banks tightening standards tell you credit supply is. The sharpest net tightening of standards on record is +83.6 (2008Q4, the post-Lehman quarter); the weakest large-firm demand is -70.2 (2001Q4, the dot-com downturn). All values are net percentages of banks, not loan volumes. Shaded bands are NBER recessions.
Source: Board of Governors, Senior Loan Officer Opinion Survey (release 191, via FRED) | FRED, Federal Reserve Bank of St. Louis Methodology
The US credit cycle: loan demand, standards, and sectoral debt
Federal debt has risen past both private sectors
US Z.1 debt securities and loans outstanding by sector in nominal USD trillions, 1945–present. Household debt ($21.1T) plateaued relative to its pre-2008 trajectory after the GFC deleveraging; federal debt ($34.5T) has risen past both private sectors since 2008. Nominal levels, not deflated or scaled by GDP.
Source: Board of Governors, Z.1 Financial Accounts of the United States (release 52, via FRED) | FRED, Federal Reserve Bank of St. Louis Methodology
Money markets: SOFR, EFFR, and the FOMC target range
SOFR and EFFR are inside the Fed's target range
Daily US overnight rates in percent, 2016–present. These rates anchor the short end of the curve. SOFR, the Secured Overnight Financing Rate, is the volume-weighted median of overnight Treasury repo and is the successor benchmark to USD LIBOR; EFFR, the Effective Federal Funds Rate, is the volume-weighted median of overnight unsecured interbank lending and is the rate the FOMC steers into its target range. Latest SOFR is 3.62% and EFFR 3.63% (Aug 13, 2026), both inside the FOMC target range of 3.50–3.75%; the 30-day compounded SOFR average is 3.64%. These NY Fed reference rates are the canonical short-rate source here, superseding any single SOFR series carried on the FRED spine. These are the rates; the corresponding repo and money-fund volumes have their own page.
Both overnight rates sit inside the shaded target band in normal times. Three departures stand out: the September 17, 2019 repo spike, when a collateral-and-reserves squeeze drove SOFR to 5.25% (its 99th percentile hit 9.00%) far above the band; the March 2020 cut to the zero lower bound (target 0–0.25%); and the March 2023 SVB week. SOFR is secured and starts at its 2018 inception, so its line begins mid-chart.
Source: Federal Reserve Bank of New York, Reference Rates (Markets Data API) Methodology
US monetary policy
The federal funds rate reached double digits under Volcker
Weekly US effective federal funds rate in percent, 1954–present, from the 1.13% first print in 1954 through the Volcker peak to today. The NY Fed’s own EFFR history starts Jul 3, 2000; earlier values (the gray segment) are the Board of Governors’ H.15 daily federal funds rate distributed via FRED (series DFF, source fred_dff_h15). Shown at weekly frequency (the last print of each week) so the uniform daily FRED segment and the business-day NY Fed segment share one honest time axis; the two colors are the two sources, not a break in the rate.
Source: Federal Reserve Bank of New York, Reference Rates (Markets Data API) | Board of Governors H.15 via FRED, series DFF (pre-2000 EFFR) Methodology
The natural rate of interest: r-star
Where does policy stand relative to neutral? The NY Fed's Holston-Laubach-Williams model puts the US natural rate of interest, the real short rate consistent with full strength and stable inflation, at 1.06% in 2026Q1 (the original Laubach-Williams model reads 1.70%). The comparable real policy rate, built here as the effective federal funds rate (FRED FEDFUNDS) averaged over the same quarter minus 12-month core PCE inflation (FRED PCEPILFE) averaged over that quarter, is 0.50% (3.64% nominal less 3.14% inflation): -0.55 pp below the HLW natural rate on this construction.
The natural rate of interest: r-star
US r-star has only partly recovered from its post-GFC low
Quarterly US natural-rate estimates in real percentage points, 1961–present. The series fell from around 5% in the 1960s to a post-GFC low just above half a percent in 2014, and only a partial recovery since. Trend growth (HLW g, not charted) is 2.42% in 2026Q1, so the low r-star is carried by the model's negative other-determinants component, not by growth.
Source: Federal Reserve Bank of New York, Measuring the Natural Rate of Interest | Holston, Laubach and Williams (2023), NY Fed Staff Reports no. 1063; Laubach and Williams (2003), Review of Economics and Statistics 85(4) Methodology
Household inflation expectations
One-year inflation expectations remain above the three-year view
Monthly median US household inflation expectations in percent since 2013 (158 surveys). The Survey of Consumer Expectations asks a rotating panel of household heads where inflation is going. In July 2026 the median respondent expected 3.6% inflation over the next year (from 3.7% the month before) and 3.3% at the three-year horizon. Disagreement is wide: the middle half of one-year answers spans 2.2% to 6.0%. The one-year median peaked at 6.8% in June 2022, the post-pandemic inflation shock.
Source: Federal Reserve Bank of New York, Survey of Consumer Expectations Methodology
The US household balance sheet
Household debt by product and its delinquency, from the New York Fed’s Consumer Credit Panel (an anonymized 5% sample of Equifax credit files). Total household debt stands at $18.79 trillion (2026Q1), of which mortgages are $13.19 trillion (70.2% of the total). The stress is concentrated in unsecured revolving credit: credit-card balances 90+ days delinquent have reached 13.12%, against just 1.09% on mortgages.
Household debt
Mortgages dominate the US household balance sheet
Quarterly US debt balances outstanding by product in nominal USD trillions, 2003Q1–present. Mortgages dominate the balance sheet; the non-housing products (auto, student, credit card) are the smaller, faster-moving lines.
Source: New York Fed, Quarterly Report on Household Debt and Credit (Consumer Credit Panel / Equifax) Methodology
Household debt stress
Credit cards and student loans carry the highest 90-day delinquency
Quarterly US 90-day delinquency by product in percent of balance, 2003Q1–present. A loan is counted after 90 or more days delinquent. Mortgages, cleaned out by post-2008 underwriting, sit near the floor; credit cards and student loans carry the highest delinquency.
Source: New York Fed, Quarterly Report on Household Debt and Credit (Consumer Credit Panel / Equifax) Methodology
The lender of last resort: the Federal Reserve discount window
Loan-level discount-window borrowing, aggregated by credit type. Primary credit is the standby facility for sound banks; secondary and seasonal credit are narrower programs. The single largest quarter is 2023Q1, when primary-credit borrowing summed to $3.14T across 701 distinct borrowers, in the week of the Silicon Valley Bank failure. These are loan originations summed over the quarter, a flow, not outstanding balances. Primary credit is dominated by overnight loans re-originated every business day, so the summed flow far exceeds the point-in-time stock: the Fed’s H.4.1 release shows primary credit outstanding peaking near $153 billion the week ending March 15, 2023, more than twenty times smaller than the $3.14T of originations that same quarter. Over the full record (2010Q3–2024Q2), all credit types sum to $4.20T of originations. Aggregates only: no borrower is named.
Federal Reserve liquidity
Primary-credit originations dwarfed every other quarter after the regional-bank failures
US discount-window originations summed within each quarter in USD billions, 2010Q3–2024Q2. The 2023Q1 primary-credit spike (mostly the two FDIC bridge banks after the March 2023 failures) dwarfs every other quarter on this flow basis, which is exactly why the originations-vs-outstanding distinction matters. Secondary and seasonal credit are small throughout; two quarters carry no secondary or seasonal loans and break those lines rather than reading zero.
Source: Board of Governors, Discount Window loan-level disclosures (Dodd-Frank section 1103) Methodology
US equity valuations
US equity valuations rank at the 99th percentile since 1881
Monthly US cyclically adjusted price-to-earnings ratio from 1881–2026. CAPE (P/E10) is the real S&P Composite price divided by the ten-year average of real earnings, Robert Shiller’s standard gauge of how richly US equities are valued relative to their own long history. The latest available reading is 41.4 (July 2026), richer than about 99% of all months. Its all-time high is 44.2 (December 1999, the dot-com peak); its all-time low is 4.8 (December 1920). This is a descriptive valuation measure, not a market-timing signal or investment advice.
Source: Robert J. Shiller, ie_data (shillerdata.com) Methodology
For the other side of the global monetary picture, see how the world holds its reserves: reserve-currency composition.
Global financial stress
Two official daily stress indices that both span the 2008 and 2020 crises. The OFR Financial Stress Index is the U.S. Treasury Office of Financial Research’s market-based gauge, built as the sum of stress contributions from the United States, other advanced economies and emerging markets, and centered so zero is its long-run average. The ECB CISS is the European Central Bank’s composite indicator of systemic stress, bounded in [0, 1] and constructed to rise when several market segments are stressed at once. Both are official indices carried here unaltered, and both currently read well below their crisis levels.
Global financial stress
Market stress is calmer than 76% of trading days since 2000
Daily global financial-stress index in points, 2000–2026; higher means more stressed and zero is the long-run average. The latest reading is -2.74 (Aug 12, 2026), at the 24th percentile of its history. Its all-time peak is the October 2008 global financial crisis; the March 2020 COVID crash is the second spike. Shaded bands are NBER recessions.
Source: OFR Financial Stress Index, U.S. Treasury Methodology
Latest regional stress contributions, Aug 12, 2026
OFR builds the composite as the sum of these three regional contributions, so they decompose the headline reading above (to rounding).
Global financial stress
Euro-area stress is at the 13th percentile since 1980
Daily euro-area composite indicator of systemic stress from 1980–2026, on an index bounded in [0, 1] (higher means more systemic stress). The latest reading is 0.009 (Aug 4, 2026). Three peaks stand out: the post-Lehman 2008 crisis (the series maximum), the 2011–2012 euro sovereign-debt crisis, and the March 2020 COVID shock.
Source: ECB CISS, European Central Bank Data Portal Methodology
Latest CISS by country version, most-stressed first
| Area | CISS (0–1) | As of |
|---|---|---|
| BE Belgium | 0.045 | Aug 4, 2026 |
| US United States | 0.027 | Aug 4, 2026 |
| CN China | 0.020 | Jul 31, 2026 |
| IT Italy | 0.016 | Aug 4, 2026 |
| DE Germany | 0.015 | Aug 4, 2026 |
| IE Ireland | 0.011 | Aug 4, 2026 |
| U2 Euro area | 0.009 | Aug 4, 2026 |
| PT Portugal | 0.009 | Aug 4, 2026 |
| GB United Kingdom | 0.008 | Aug 4, 2026 |
| NL Netherlands | 0.007 | Aug 4, 2026 |
| AT Austria | 0.005 | Aug 4, 2026 |
| ES Spain | 0.005 | Aug 4, 2026 |
| FR France | 0.005 | Aug 4, 2026 |
| FI Finland | 0.004 | Aug 4, 2026 |
14 areas carry the daily CISS. Greece has no daily version (only a monthly sovereign sub-index) and is absent by construction, not omitted. China (CN) lags the others by a few days.
Global financial stress
Supply-chain pressure is at the 88th percentile since 1998
Monthly global supply-chain pressure in standard deviations from its 1998–present average (that average is 0.01), across 343 observations since 1998; the GSCPI is a real-economy gauge, not a financial-stress index, and combines transportation and manufacturing data across the major economies. The latest reading is +0.80 (July 2026), down from +1.19 the month before. Pressure peaked at +4.44 in December 2021, the post-pandemic supply-chain crunch, and troughed at -1.59 in May 2023.
Source: Federal Reserve Bank of New York, Global Supply Chain Pressure Index Methodology
Official stress indices, side by side
These authoritative financial-stress gauges are each oriented so higher = more-stressed. They are the official indices from the Federal Reserve Banks of Chicago, St. Louis, and Kansas City (NFCI, STLFSI4, KCFSI), the U.S. Treasury (OFR FSI), and the European Central Bank (CISS), distinct from the FinObservatory FCI above (our own transparent, long-history composite, shown for contrast). Latest readings are shown in each publisher’s own units.
Source: FRED, Federal Reserve Bank of St. Louis | OFR Financial Stress Index, U.S. Treasury | ECB CISS, European Central Bank Data Portal NFCI, STLFSI4 and KCFSI (Federal Reserve), OFR FSI (U.S. Treasury) and CISS (ECB) are official indices on different scales; the FinObservatory FCI is our own composite, shown alongside for contrast, not as an equal authority. Values are each index's own units, not cross-comparable levels. Methodology
How does today compare to 2007 and 2020
7 stress indicators (all oriented so higher = more stressed, all covering both crises) at today’s reading, at their most-stressed reading during the 2007–2009 global financial crisis, and during the 2020 COVID crash.
| Indicator | Today | GFC peak (2008) | COVID peak (2020) |
|---|---|---|---|
FinObservatory FCI index (sd) Quarterly; the March-2020 spike averages out (a documented limitation), so its COVID column is near zero. | -0.68 Mar 31, 2026 | 2.53 Dec 31, 2008 | 0.13 Jun 30, 2020 |
Chicago Fed NFCI index (sd) | -0.55 Aug 7, 2026 | 3.10 Nov 28, 2008 | 0.31 Apr 3, 2020 |
St. Louis Fed Financial Stress Index index (sd) | -0.77 Aug 7, 2026 | 9.68 Oct 10, 2008 | 5.66 Mar 20, 2020 |
OFR Financial Stress Index index (0 = long-run average) Daily, US Treasury OFR; sum of regional stress contributions. | -2.74 Aug 12, 2026 | 29.32 Oct 10, 2008 | 10.27 Mar 19, 2020 |
ECB CISS, euro area index (0 to 1) Daily, ECB; systemic-stress composite bounded in [0, 1]. | 0.01 Aug 4, 2026 | 0.94 Nov 20, 2008 | 0.69 Apr 1, 2020 |
VIX annualized % | 14.63 Aug 13, 2026 | 80.86 Nov 20, 2008 | 82.69 Mar 16, 2020 |
Moody's Baa minus 10y Treasury percentage points | 1.67 Aug 13, 2026 | 6.16 Dec 4, 2008 | 4.31 Mar 23, 2020 |
Source: FinObservatory macro engine (absorbed from argus), driven unmodified | FRED, Federal Reserve Bank of St. Louis | OFR Financial Stress Index, U.S. Treasury | ECB CISS, European Central Bank Data Portal Most-stressed reading within each crisis window (2007-01 to 2009-12; 2020). Each indicator is in its own units, not cross-comparable levels. The FinObservatory FCI is quarterly, so its brief-and-averaged-out March-2020 spike reads near zero, a documented limitation. Methodology
See the full methodology for the FCI component set and PCA construction, the Basel III one-sided-HP credit gap, the credit-impulse definition, the curated panel, the NFCI validation, and every stated limitation.