Fed's New Vulnerability Gauge Flashes Red at 65th Percentile

The Federal Reserve's Financial Vulnerability Index (FVI) has reached its 65th percentile in the second quarter of 2026, signaling a notable level of vulnerability but not yet elevated.

Lance Roberts, a financial commentator, highlighted this data on X and explained that according to the index's historical distribution, values within the fourth quintile (61st to 80th percentiles) are classified as 'notable', while those above the 81st percentile are considered 'elevated'.

The FVI aggregates 39 variables across four primary categories of vulnerability: valuation pressures, household and business borrowing, financial leverage, and funding risk. It's designed to capture gradual build-ups of underlying structural weaknesses, unlike traditional FCIs that spike during market turmoil.