The credit stress monitor tracks the health of corporate credit markets and overall financial conditions. High-yield and BBB spreads measure the premium investors demand for taking credit risk. The NFCI and adjusted NFCI capture tightness across the entire financial system. The 10-Year Treasury provides the risk-free benchmark against which all credit is priced.
Credit spreads are among the most reliable real-time indicators of economic stress. Sharp widening has preceded or coincided with every recession since the 1980s. The NFCI adds breadth by measuring conditions across credit, equity, and funding markets.