Financial conditions in the U.S.A. are at the loosest levels of this economic cycle. Since the Fed has communicated its plans on balance sheet normalization and has said that it is going to stop quantitative tightening in September, they are really only left with the tool of interest rates. Right now, financial conditions continue to be extremely favorable. See the Chicago Fed National Conditions Index in the chart below as one such indicator that shows financial stress levels are quite low.
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