The stress index reads Normal. Nothing inside it does.
The TradeTurbulence Stress Index sits at 49.0 — energy 86.7, trade activity 10.4. Three months in 221 have carried that signature. They ended differently.
The Stress Index closed at 49.0 on 27 July, inside the Normal band and a point below its 18-year mean of 50.1. Underneath it, energy shock reads 86.7 and global trade activity reads 10.4 — two components of equal weight, 76 points apart. Add dollar pressure at 70.6 and the three-way combination has occurred in three of 221 months. The other two were June 2008 and March 2021, and they resolved in opposite directions.
A Normal reading assembled from a Severe and a Calm
Each component is a percentile against its own past five years. Energy at 86.7 means it has been calmer than this on 86.7% of trading days since 2021.
| Component | Weight | Score | Band | Contribution |
|---|---|---|---|---|
| Financial conditions | 30% | 35.2 | Settled | 10.6 |
| Energy shock | 25% | 86.7 | Severe | 21.7 |
| Global trade activity | 25% | 10.4 | Calm | 2.6 |
| Dollar pressure | 20% | 70.6 | Elevated | 14.1 |
The contributions sum to 49.0. That is the whole of the headline number: one component above the 86th percentile of its five-year range, one below the 11th, and a weighted average that sits between them and describes neither. Against the past five years of its own readings the index sits at the 60th percentile, up 18.6 points on the year and 3.9 on the month.
The energy component is not reading the oil price
Brent was $86.99 on 20 July, seven days behind. The component never sees that level. It reads two things about the movement: 20-day realised volatility, at the 83.8th percentile and carrying 60% of the component, and the 63-day absolute move, at the 91.1st percentile and carrying the other 40%. A large sustained repricing in either direction resets input costs across every traded good, which is why direction is discarded and size kept.
Dollar pressure is the part that changed most recently. The broad dollar index was 120.71 on 24 July; its 63-day change ranks at the 70.6th percentile, from 33.6 at the end of May and 49.0 at the end of June. Roughly half of world trade is invoiced in dollars, so a fast appreciation raises import costs and tightens trade finance everywhere outside the United States. Energy has held above 79 for five consecutive months; the dollar component was still below 50 at the end of June.
Three months in 221, and the fourth component is where they part
Filtering the monthly history for energy at 80 or above and dollar pressure at 70 or above returns 20 months out of 221 — the 2008 crisis, the 2014–15 oil collapse, the 2020 shutdown. In 17 of those 20 the trade activity component also sat at 46.7 or higher. Three had it at 20 or below:
| Month | Energy | Dollar | Trade activity | Financial conditions | Index |
|---|---|---|---|---|---|
| June 2008 | 99.2 | 79.0 | 13.4 | 90.3 | 71.0 |
| March 2021 | 87.3 | 79.8 | 3.4 | 31.5 | 48.1 |
| July 2026 | 86.7 | 70.6 | 10.4 | 35.2 | 49.0 |
The 30%-weighted component separates them. June 2008 carried financial conditions at 90.3, the index already read 71.0, and by October it reached 99.1 — the highest monthly value the series holds. March 2021 carried 31.5, read 48.1, and fell to 29.1 by April and 21.4 by May; the index recorded its all-time low of 15.7 on 10 June 2021. Today’s financial conditions component is 35.2, set by the St. Louis Fed stress index at −0.70 and the VIX at 18.67.
Two precedents cannot establish a rule. What the history shows is which variable the two outcomes disagreed on, not what this one will do.
The calm component is a May statement
Global trade activity is derived from IGREA, whose most recent observation is 1 May 2026 — 87 days back. The component has printed 10.4 for three consecutive months because it has been reading the same May figure each time. Nothing in the current index knows what happened to dry-bulk freight demand in June or July.
The five-year window matters in the other direction. March 2021’s percentiles were measured against a window containing the March 2020 crash; today’s window runs from 2021 and contains nothing of that scale. The same percentile therefore represents less absolute violence now than it did then. Today’s 86.7 and 2021’s 87.3 are equivalent rankings, not equivalent shocks.
What to watch
The St. Louis Fed Financial Stress Index (STLFSI4), weekly, currently −0.70. A move above zero would put the largest-weighted component into the upper half of its range. On the evidence of 2008 and 2021, that is the variable on which the two paths diverged.
IGREA’s June observation, expected late August on the current lag. It will be the first genuinely new reading on trade activity since 1 May, and it decides whether 10.4 was a description or an artefact of staleness.
Brent’s 63-day absolute move, at the 91.1st percentile. That window rolls forward mechanically, so absent fresh repricing the reading decays on its own. Energy is the single largest contribution to the index — 21.7 points of the 49.0 — and nothing else is positioned to replace it if it goes.