# Banking system stress — NORMAL (stable)
id banking-stress · Markets · horizon acute · checked 2026-11-01T11:52Z · at this level since 2026-10-31T11:26Z · stale after 2026-11-02T01:52Z
Assessed by an AI model (Anthropic Claude) against published rubrics; not a forecast or advice · CC BY 4.0 · https://canary.danleech.com/s/banking-stress

Value: STLFSI -0.58
Rated on: St Louis Fed Financial Stress Index < 0, ECB CISS < 0.25, and no notable bank failures or rescues.

Financial stress index below zero; 2026 bank failures have all been small

Why it's at this level: The St Louis Fed Financial Stress Index was −0.58 in the latest weekly reading (week to 23 Oct), below its long-run average. Six small US banks have failed in 2026, the largest (Nano Banc, 25 Sep) with about $736m in assets; no new failure was reported as of 1 Nov.

What this means for you: There is no sign of systemic banking stress. Commercial property refinancing at higher rates remains the pressure point for smaller lenders.

Why it matters: Bank failures turn market losses into credit crunches; 2008 and 2023 both began as 'contained' bank problems.
What moves it: Rate shocks to bond portfolios, commercial property losses, deposit flight, private-credit links.

Rubric — Alert: STLFSI > 1.5, or ECB CISS > 0.45, or a systemically important bank fails or needs rescue, or emergency central-bank facilities launched. | Watch: STLFSI 0–1.5, or ECB CISS 0.25–0.45, or a mid-sized bank failure/rescue, or a large bank under visible funding pressure. | Normal: St Louis Fed Financial Stress Index < 0, ECB CISS < 0.25, and no notable bank failures or rescues.

Sources:
- FRED — St. Louis Fed Financial Stress Index (STLFSI4) (2026-10-23) https://fred.stlouisfed.org/series/STLFSI4
- Disruption Banking — Six US banks failed in 2026, the most in a decade (2026-10-01) https://www.disruptionbanking.com/2026/10/01/six-us-banks-failed-in-2026-the-most-in-a-decade-what-that-says-about-the-economy/