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 >
RSM US Financial Conditions Index
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 >
U.S. financial markets in the new year
Financial markets have started the year facing a host of challenges, including the prospect of a stand-off over the debt ceiling in a divided Congress and the possibility of a recession later this year. At the same time, businesses are contending with higher costs associated with the ... READ MORE >
Did fiscal spending go too far? Assessing the global economy.
Fiscal responses by governments around the world during the pandemic were unprecedented. Many governments put forward anywhere between 20% and 30% of gross domestic product in spending to mitigate the impact of economic shutdowns. Now, after months of elevated inflation and surging interest rates, ... READ MORE >
Financial conditions update: Rising risks and tightening markets
Despite a strong bounce in U.S. financial markets following better-than-anticipated inflation data for October, financial conditions remain tight. The risk to the economic outlook has not abated after one month of encouraging consumer price index data. Central banks continue to increase the cost of ... READ MORE >
Monetary policy tightening, the bond market and the business cycle
Central banks in developed economies are contending with a series of shocks that have threatened price stability and, ultimately, economic growth. Now, these shocks, which include inflation, interest rate increases and energy market turmoil, are all showing up in fixed income markets. With consumer ... READ MORE >
RSM US Financial Conditions Index: Risk aversion returns
Financial conditions in the United States deteriorated again in May after a pause in late April. The recent selloff across equity markets is indicative of the policy shift at the Federal Reserve, which intends to tighten financial conditions to achieve price stability. While we continue to make the ... READ MORE >