Financial conditions continue to improve both in Canada and in the United States, signaling stability in markets and setting the groundwork for economic growth. RSM's proprietary financial conditions indexes are based on the level of risk or accommodation in four asset markets: stocks, money markets, ... READ MORE >
RSM US Financial Conditions Index
U.S. financial conditions update: A shift in structure and a new center of gravity
Monetary policy has reached a pivot point, bringing an increased probability for sustained growth and easing fears of a premature end to the business cycle. This improvement should underscore the positive outlook that will be featured in the Federal Open Market Committee’s Summary of Economic ... READ MORE >
How real is the wealth effect in a bull market?
Despite what you might read or hear, the stock market is not the economy. But that does not mean you should ignore the effect that the stock market has on household income and spending, the labor market, overall financial conditions and economic growth. A 2021 paper in the American Economic Review ... READ MORE >
Financial conditions turn positive amid economic resilience
For the first time since February 2022, the RSM US Financial Conditions Index has turned positive amid a robust economy, strong labor market, easing inflation and rising real wages and personal disposable income. Barely above zero, our index indicates normal levels of risk being priced into the ... READ MORE >
Rate normalization and the return of risk
Financial markets had a difficult start to the year after an exuberant end to last year. The yield on 10-year Treasury bills dropped from 5.0% to 3.8% to end the year as investors priced in an early start for monetary policy easing. Now, as the Federal Reserve signals rate cuts, we think conditions ... READ MORE >
RSM US Financial Conditions Index moving toward neutral
Having weathered turmoil in the banking sector and the standoff over the debt ceiling, financial conditions in the United States are easing, moving toward levels of risk normally priced into financial assets. But while signals from the equity market are positive, the bond market continues to ... READ MORE >
The impact of expectations for Fed policy on the money and bond markets
After three months of what seemed to be disregard for the direction of Federal Reserve policy, the money markets are once more expecting a tightening of financial conditions. But it took a banking crisis to get there. The bond and credit markets in our estimation are pricing in a recession ... READ MORE >
It’s a matter of trust: Financial conditions tighten on stability risks
Trust is the lubricant that makes modern commerce possible. It facilitates an uninterrupted operation of finance that allows firms to fund expansion and modern economies to operate efficiently. It reduces transaction costs, minimizes frictions and creates the conditions for broader and deeper ... READ MORE >
RSM US Financial Conditions Index tightens as market sees a hard landing
The RSM US Financial Conditions Index inched down to 0.6 standard deviations below neutral from 0.4 previously as policymakers, investors and firm managers prepare for a period of higher interest rates and persistent inflation. Markets are moving to price in a hard landing around a ... READ MORE >
Financial conditions ease as downturn in corporate debt issuance lingers
As the Federal Reserve has slowed the pace of its interest rate increases recently, financial conditions in the American economy have eased as well. The RSM US Financial Conditions Index has moved to only 0.4 standard deviations below normal as asset prices anticipate improved prospects for reduced ... READ MORE >