Investors and Wall Street analysts are sounding the alarm about a possible “market accident”, as successive bouts of tumult in US stocks and bonds and a surging dollar cause rising levels of stress in the financial system.
A gauge of strain in US markets — produced by the Treasury’s Office of Financial Research — has soared to its highest level since the coronavirus pandemic ructions of May 2020.
Even as equities on Wall Street start the new quarter with gains, the OFR’s Financial Stress index is near a two-year high at 3.1, where zero denotes normal market functioning. That has added to a growing list of benchmarks which suggest trading conditions in US government debt, corporate bonds and money markets are increasingly stretched.
