BREAKING: The US Financial Conditions Index is down to -1.75, the lowest in at least 2.5 years. Financial conditions have eased -0.80 points since March as markets recovered. Most of this easing was driven by equity gains and tighter credit spreads. By comparison, the index stood near 0 in March 2025. This comes despite the market pricing in ~20 bps of Fed rate hikes by the December 2026 Fed meeting, a complete reversal from the 40 bps of rate cuts expected before the Iran War. Financial conditions are easing even as inflation risks continue to build.(The Kobeissi Letter)