ECO I monitors the U.S. economy and financial markets for warning signs of a downturn or crash.
RISK STAGE3/ 7Watch rates
One early-warning signal is on.
Bond yields jumping · Stocks pricier than 90% of history · Lenders asking unusually little for risk
Since 07 Oct 2026: Lenders asking unusually little for risk on
1Calm
2Stretched
3Watch
4Early warning
5Cracking
6Breaking
7Crisis
Stage each month since 1990, replayed with revised data. Gray: recessions.
MARKET STRESSNormal since 21 Oct 2025 · volatility
OFR data through 22 Oct · Treasury data through 26 Oct
Describes observed strain. Not a forecast of a fall.
Second opinion risk 6 / 10
Not yet in official data: Anthropic lost over $80bn in half a year while seeking a huge listing, and Meta plans up to $95bn in new shares, unseen in bond gauges. Banks curbing outside AI agents and Microsoft offering 60,000 buyouts signal tightening operations before payroll surveys capture them.
Commentary vs data: Talk of bonds as safe again ignores the 10-year rate near 5.00%, still up 0.87 points in six months, keeping mortgages and loans dear.
Bottom line: Favor firms paid from current sales and avoid new borrowing until the extra charge for company debt turns up.
Stocks 100th percentile · Extra interest -0.39 pts · 10-year rate +0.87 pts in 6 months
Stocks are pricier than in 90% of the past and lenders charge companies no more than usual for risk, yet the 10-year rate rose 0.87 points in six months.
Spending vs. paychecks
Spending +2.6% · Pay after inflation +0.8% (12 months)
After inflation, spending grew 1.8 points faster than pay over 12 months; households are covering the gap from savings or credit.
Long yields vs. short rates
10-year rate +0.87 pts in 6 months · 10-year minus 3-month +0.94 pts
The 10-year rate rose 0.87 points in six months, even though short-term rates are no longer above it.
Layoffs vs. hiring
Jobless claims +0% vs. one-year low · Jobs +51k a month
Few layoffs, but hiring is slow: a job lost now is hard to replace.
Full assessment and supporting reasoningWhat limits this conclusion
The exact Sahm-style recession check is unavailable because its full monthly lookback is not valid. Missing CPS months are not skipped or filled.
Valuation vulnerability is high, while financial stress is subdued and payrolls are growing
Why caution is warranted
The Board's nonfinancial corporate equity-to-net-worth measure is at the 99.7th percentile of its retained history since 1980. High historical valuation is vulnerability, not proof of a bubble or its timing.
What points the other way
OFR's global financial stress index is not above its historical average; it does not currently confirm an acute market-stress episode.
Neither business-size category reports significant net tightening in the latest SLOOS. This describes changes in standards, not their absolute tightness.
Nonfarm payrolls increased by 152 thousand jobs over three months.
Method, scope and reproducibility
This is an explicit ECO I interpretation policy, not a statistically calibrated crash or recession forecast.
Source: U.S. Bureau of Labor Statistics. BLS.gov cannot vouch for the data or analyses derived from these data after the data have been retrieved from BLS.gov. Data access dates are supplied as retrieved_at in canonical observations. Latest retained BLS access: 03 Oct 2026 · 00:33 UTC. BLS source terms
Source: BIS debt service, credit and credit-gap statistics; debt service is model-based. ECO I's calculations and interpretation are its own; BIS does not endorse them. BIS statistical-use terms