What is the U.S. Financial Stress Score?

The methodology behind the number on the FedWatch homepage.

The score answers one question: how close is the U.S. financial system to a point where policymakers are forced to act?

That's a different question than recession probability, VIX, inflation, or Treasury yields taken in isolation. It's closer to proximity × severity × probability of policy-forcing financial-system stress — a judgment call that requires synthesizing Treasury-market mechanics, funding-market plumbing, and how the Fed and Treasury are actually behaving, not just what a single indicator says.

How it's produced

Each evaluation runs through three AI stages, each a different model, so no single model's judgment silently becomes the answer:

Research & scoring — a deep-research model does live web research across Treasury, funding-market, and Fed-policy sources and proposes a score.
Independent critique — a second model reviews that evidence independently, without seeing the first model's number, and derives its own. A real disagreement between the two triggers a targeted follow-up search on the specific point in dispute.
Narrative synthesis — a third model writes the plain-language summary, explicitly explaining any disagreement between the first two rather than quietly averaging it away.

Every evaluation — material or not — is stored. Only evaluations judged materially different from the last published one trigger a new score, a notification, and a newsletter issue. No daily noise.

Scale and regime

The score runs 1–10. Roughly: 1–3 normal, 4–5 elevated, 6–7 significant stress, 8–9 policy-forcing danger zone, 9–10 market dysfunction or intervention underway. A second, related figure — how much Treasury/Fed policy has actually begun supplying liquidity — is tracked alongside it, since high stress with a rising policy response reads very differently than high stress with no response at all.

Fully automated

This is an information product, not a trading system or an advisory service, and there is no human-approval step in the publishing path — a material evaluation publishes automatically the moment the three-stage process completes.

Where the data comes from

Live research plus a small set of directly-sourced macro signals (Treasury yields, a broad-dollar proxy, high-yield credit spreads) from E3D's own Macro & Liquidity Intelligence system, shown alongside the score on the FedWatch homepage as a complementary signal.

Not investment advice. This score and its narrative are produced by an AI research and synthesis process and are provided for informational purposes only. They are not a recommendation to buy, sell, or hold any asset.