NFCI vs Credit Spreads
NFCI vs high-yield credit spreads — which captures financial conditions better?
One-year comparison
Left axis: Credit Spreads (green) · Right axis: Chicago Fed NFCI (blue)
The analysis
The NFCI aggregates 105 measures of financial conditions, including credit spreads, into a single standardized index. It captures conditions across money markets, debt, equity, and banking sectors. Credit spreads alone are one piece of the puzzle — the NFCI is the more complete picture. Use NFCI for a single dashboard number; use credit spreads for the underlying signal when NFCI moves.
Track high-yield credit spreads (ICE BofA HY OAS). Widening spreads signal rising default risk and are a classic recession leading indicator.
Monitor the Chicago Fed NFCI — 105 financial measures in one index. Positive values signal tight financial conditions and recession risk.