Fed's New Risk Gauge Flashes 'Notable' Warning at 65th Percentile

The Federal Reserve has introduced a new index to track structural risks in the US financial system. The Financial Vulnerability Index (FVI) hit the 65th percentile in the second quarter of 2026, which is categorized as 'notable' but not yet 'elevated.'

Lance Roberts, a financial commentator, highlighted on X that this placement signals vulnerability, but it has not reached extreme levels.

The FVI aggregates 39 variables across four primary categories of vulnerability, including valuation pressures, household and business borrowing, financial leverage, and funding risk. According to the researchers, when multiple categories indicate heightened risk simultaneously, the index identifies the financial system as vulnerable.

Roberts stated that the 'notable' designation applies to index values falling within the fourth quintile, which is between the 61st and 80th percentiles. Values above the 81st percentile are classified as 'elevated.'