Definition
How easy or hard it is for people and businesses to get money, judged from borrowing costs, stock prices, credit spreads and the dollar together.
The story
Even if the Fed doesn't change its rate, financial conditions can tighten if bond yields jump, stocks fall and lenders get pickier. The Chicago Fed publishes a weekly index, the NFCI (National Financial Conditions Index), that rolls more than 100 of these measures into one number.
Why markets watch it
The Fed watches financial conditions because they decide how much its rate moves actually bite.
Connects to
Tightening and easingCredit spreadTreasury yieldUS Dollar Index
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms