March 7, 2018 / 3:48 PM / a year ago

U.S. financial conditions tightest since May 2017: Chicago Fed data

(Reuters) - U.S. financial conditions contracted to the tightest level in nearly 10 months after recent market volatility from rising bond yields and concerns the Federal Reserve may raise rates faster, an index released by the Chicago Federal Reserve on Wednesday showed.

The Chicago Fed’s National Financial Conditions Index moved to -0.77 in the week ended March 2, a level not seen since the week of May 19, 2017. The index was -0.78 in the prior week.

A negative reading suggests looser-than-average financial conditions, while a positive reading points to tighter-than-average conditions.

Overall financial conditions are still loose, which is supportive of economic growth. But they have tightened since late 2017 with rising interest rates and increased market volatility, analysts said.

The gauge is a composite of three components that measure leverage, credit conditions and volatility and funding risk in the financial sector.

Reporting by Richard Leong; Editing by Meredith Mazzilli

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