WThe three bars show the last 3 weeks for this indicator, oldest left to newest right. Bar height reflects each reading relative to the other two — the tallest is the highest of the three, the shortest the lowest.
Historical context: Currently in the 12th percentile — near historically low/favorable levels.
What this means right now: Below-average EM stress — global financial conditions are supportive. EM assets are broadly stable or rallying. No signal of EM contagion risk to developed markets.
OFR FSI — Emerging Markets · Daily · 2000–2026
Grey areas = NBER recessions · Scroll to read · zoom and pan in Expand
Monthly values
OFR FSI — Emerging Markets — the last 12 months
Every month's reading, with the band the heatmap gives it. The chart above shows the same series in full.
Month
Value
Band
Sep 2026
-0.56
Healthy reading
Aug 2026
-0.55
Healthy reading
Jul 2026
-0.53
Healthy reading
Jun 2026
-0.57
Healthy reading
May 2026
-0.59
Healthy reading
Apr 2026
-0.53
Healthy reading
Month-end readings of the same series the chart shows, from ofr_fsi_em. Values are the current record, not point-in-time: a month that has since been revised shows its revised value.
What is the OFR FSI EM Stress?
The OFR Financial Stress Index (FSI) Emerging Markets sub-component measures the contribution of emerging market financial stress to the broader OFR FSI, a daily index produced by the US Office of Financial Research. The overall OFR FSI aggregates market signals across six dimensions — credit, equity valuation, safe assets, funding, and volatility — across three geographies: US, other advanced economies, and emerging markets. This indicator isolates the emerging markets (EM) geographic contribution.
The OFR FSI is constructed so that 0 represents the historical average stress level, positive values indicate above-average stress, and negative values indicate below-average (calm) conditions. The EM sub-component follows the same convention. Most of the time this index sits very close to 0 — the interquartile range of the daily series is a remarkably tight -0.22 to +0.07, reflecting that elevated EM stress is episodic rather than persistent.
EM financial stress matters for the US macro outlook because emerging markets are the "canary in the coal mine" for global risk-off dynamics. EM stress often begins before developed-market stress because: (1) EM currencies depreciate when global risk appetite falls, (2) EM sovereign/corporate spreads are more sensitive to dollar funding conditions, and (3) commodity-exporting EM economies are hit first by growth slowdowns that later reach the US. In the Forward Stress framework, this indicator captures the "global financial conditions" stress dimension.
The series was historically volatile during the 2008 GFC (peak ~3.1) and had a notable spike during the COVID March 2020 dash-for-cash (~1.2). Ordinary market stress events — 2022 EM pressure, 2015-16 China crisis, 2011 Eurozone contagion — all registered at 0.5-0.55, now classified as the negative band.
How We Color-Code the OFR FSI EM Stress
Our heatmap colors each indicator based on historically significant thresholds:
< -0.75
Unusually calm EM markets — bottom ~5% of daily history. Reflects a period of broad global risk-on.
-0.75 to 0
Below-average EM stress — calm to slightly calm; includes the current reading of -0.575
0 to +0.25
Normal range — median to p90; this tight band reflects the highly clustered nature of this daily series
+0.25 to +1.0
Elevated EM stress — above p90; includes 2011, 2015-16, and 2022 crisis peaks (~0.5)
> +1.0
Acute EM crisis — top ~1% of history; COVID peak ~1.2 and GFC peak ~3.1
Historical Extremes — What Happened Next?
When this indicator reaches extreme levels, history shows consistent patterns:
2008-10-24GFC EM Crisis Peak
+3.08
The GFC produced the most extreme EM stress reading in the series. Massive capital flight from EM economies, currency collapses (notably in Eastern Europe, Latin America, and Southeast Asia), and sovereign spread blowouts drove this peak. The IMF deployed emergency facilities across dozens of EM economies.
2020-03-23COVID Dash-for-Cash EM Peak
+1.23
The March 2020 global flight to safety caused a sharp EM stress spike. EM currencies fell sharply against the dollar, EM equity markets collapsed, and EM sovereign spreads widened rapidly. The Fed's swap lines with major central banks and IMF emergency financing partially stabilized EM markets within weeks.
2005-03-09Historical Calm Trough
-1.09
The deepest negative reading in the EM sub-index — a period of exceptionally calm global financial conditions driven by low volatility, benign EM fundamentals, and compressed risk premia globally. This was near the peak of the 2003-2007 global risk-on cycle.
Investor Checklist — Current Reading
Based on the current OFR FSI EM Stress reading of -0.56 (Positive):
✓Calm EM conditions supportive of global risk appetite; EM assets broadly stable
Frequently Asked Questions
What data goes into the OFR FSI Emerging Markets sub-component?
The OFR FSI aggregates data across multiple asset classes and geographies using a principal-component-like methodology. The Emerging Markets geographic sub-component captures EM-specific stress signals including EM equity volatility, EM sovereign spread indices, EM currency volatility, and EM funding conditions. The exact methodology is described in the OFR's working paper "Introducing the Financial Stress Index" (OFR Working Paper 15-02).
Why is this series so tightly clustered near 0?
The OFR FSI is constructed to have a mean of 0 and is designed to capture departures from average conditions. Because EM financial markets are calm the vast majority of the time, the daily series clusters very tightly around 0 — the interquartile range is only -0.22 to +0.07. Stress events are episodic and sharp, producing the fat right tail visible in the distribution (p99=1.56, max=3.08). This means that even a reading of +0.3 represents a genuinely unusual event (above p90), and readings above +1.0 are historically rare.
How does the OFR FSI EM differ from VIX or the broad NFCI?
VIX measures US equity implied volatility. NFCI measures US financial conditions broadly. The OFR FSI EM specifically captures emerging market financial stress, which can diverge significantly from US measures. During the 2015-16 China devaluation shock, the OFR FSI EM spiked to 0.5+ while VIX remained moderate and NFCI was still near-neutral. This divergence is precisely when the EM sub-component adds the most value — as an early-warning signal for global risk-off before it reaches US markets.
Why is this included in the Forward Stress composite?
The DR-18 Forward Stress composite is designed to capture the multi-channel transmission of credit and financial stress into the real economy. The OFR FSI EM covers the "global conditions" channel (Pillar 5): stress in EM economies can spill into the US via trade, commodity prices, dollar funding conditions, and risk sentiment. EM stress has preceded US recessions in multiple historical episodes. Including it alongside domestic credit stress indicators (EBP, BAA spread) and domestic funding stress (CP-Tbill, TED spread) completes the credit channel picture.