The FRED^® Blog

The takeaway

The Kansas City Fed uses options prices to measure how financial markets perceive the balance of risks for future short-term interest rates: a.k.a., the KC Policy Rate Skew.

The data

Options are publicly traded financial instruments that reflect expectations about future economic conditions. The Kansas City Fed uses options prices to create their daily index of how financial markets perceive the balance of risks, or “skew,” to short-term U.S. interest rates one year in the future. Our FRED graph above shows the value of this “KC PRS” index over the past five years, although daily data in FRED are available as far back as April 3, 1989.

FYI, the KC PRS is constructed with the same methodology as the Chicago Board Options Exchange Skew Index (Cboe Skew) on the Chicago Mercantile Exchange’s options data.

The interpretation

Although the ups and downs of the KC PRS don’t match the expansions and contractions of the business cycle, research from the KC Fed indicates that this index tends to lead (i.e., occur ahead of) the cyclical patterns in interest rates

A positive value of the KC PRS index indicates financial markets believe interest rates are more likely to end up higher than projected, whereas a negative value suggests rates could end up lower than projected. Between mid-September 2022 and late March 2026, the index generally showed values below zero. Between early 2026 and the time of this writing, it has averaged values above zero.

How this graph was created: Go to FRED and search for “Kansas City Fed’s Policy Rate Skew.” To plot the data over the past five years, click on the “5Y” link above the graph’s canvas.

Suggested by Diego Mendez-Carbajo.

The takeaway

The Fed’s monetary aggregates measure the amount of money in the economy. One such measure is M2, which includes liquid assets such as checking accounts but excludes non-liquid assets such as individual retirement accounts.

What is M2?

M2 measures how much money is readily available in the economy. That is, funds easily converted to cash. As of June 2026, M2 amounted to $23 trillion.

Our FRED graph above shows the components of M2:

• M1 in blue, which itself includes cash and checking and savings accounts
• Small-denomination time deposits in green
• Retail money market funds in brown
• The total value of individual retirement account (IRA) and Keogh retirement account balances, in purple, is subtracted from this measure. These funds carry large penalties for preretirement withdrawals and, therefore, aren’t considered liquid.

Recent changes

Surveys by the Board of Governors of the Federal Reserve System in recent years show that a growing share of IRA and Keogh balances held at depository institutions now sit in savings and checking-type accounts, rather than in small-denomination time deposits or in retail money market funds.

Starting July 28, 2026, these IRA and Keogh balances have been subtracted from the total value of M2, rather than from the individual values of the small-denomination time deposits and retail money market funds. This had almost no impact on the total value of M2, but it did result in the recalculation of those two components.

Graph these changes

ALFRED stores vintages of FRED data and allows you to see the historical values of both small-denomination time deposits and retail money market funds before and after this reporting changes. Both data series now show higher values.

More details

M2 data come from the Fed’s H.6 statistical release, Money Stock Measures, published weekly by the Federal Reserve Board. Keep up with their announcements here.

What about that orange area in the graph? It shows saving deposits. As of April 2020, this component was reclassified from a category of M2 into M1, so our graph doesn’t show the value past that date. Learn more about this regulatory change here.

How this graph was created: Search FRED for “M1.” Click the “Edit Graph” button and select the “Add Line” tab to search for “Small-Denomination Time Deposits: Total.” Don’t forget to click “Add data series.” Repeat this last step to search for and add the other two series: “Retail Money Market Funds” and “IRA and Keogh Accounts: Total.” Next, use the “Select Area” dropdown menu to customize “Line 4 – IRA and Keogh Accounts” by typing the formula -a and clicking on “Apply Formula.” Last, select the “Format” panel to pick “Graph type: Area” and “Stacking: Normal.”

Suggested by Maria Arias and Diego Mendez-Carbajo.

The takeaway

The New York Fed’s consumer credit dataset is now calculated with a different methodology—one that includes 33 million more borrowers than before.

The Consumer Credit Panel

With a data update on August 10, 2026, the New York Fed has changed the way it measures subprime credit risk in their Consumer Credit Panel, moving from the old/discontinued methodology of Equifax Risk Score 3.0 to the new methodology of Vantage Score 4.0.

Our FRED map above shows, for each U.S. county, the percent of the resident population with a credit score below 660 in Q4 of 2025—again, with data from the revised version of their Consumer Credit Panel.

The New York Fed advises users to “exercise caution when comparing credit score distribution changes from 2025:Q4 to 2026:Q1, as differences may reflect the change in scoring model rather than changes in borrower credit quality.”

Comparing the old and new measures

We can use our archival ALFRED database to compare the data vintages of the new Vantage Score 4.0 methodology with the vintages of the old/discontinued Equifax Risk Score 3.0 methodology. The graph shows the data for New York County (i.e., Manhattan). Clearly, these percentages are substantially higher now than they had been. For example, the current subprime share of 30.27% (green line, for Q4 2025) had been 17.72% (blue line, for Q4 2025) before the methodology was revised.

What changed, exactly?

Vantage Score 4.0 is a credit-scoring model that uses a broader set of personal finance information details than the Equifax Risk Score 3.0 it replaced. By casting a broader scoring net, 33 million additional borrowers that previously were unscored are now factored into the calculations of subprime lenders as a fraction of overall populations. And, in a fraction, when the numerator rises more than the denominator, the resulting ratio rises.

Read more from the New York Fed about this switch in methodology and its potential implications for analysts and researchers.

How the FRED map and ALFRED graphs were created: For the map, search FRED for and select “Equifax Subprime Credit Population for New York County, NY.” Click on “View Map” and select the date “2025-10-01.” For the graph: Search ALFRED for and select “Equifax Subprime Credit Population for New York County, NY.” Click on “Edit Graph” and select the “Format” tab. Use the dropdown menu to select “Graph Type: Line.” Last, adjust the date range by clicking on the “Max” option above the graph canvas.

Suggested by Diego Mendez-Carbajo.