As of 2025-12-15, Today’s GI regime is Growth Acceleration × Inflation Reacceleration. Financial conditions are tight, the yield curve is flat, and credit conditions show spread compression.
- The GI regime indicates a combination of growth acceleration and inflation reacceleration, consistent with past observations.
- Financial conditions remain tight, with a slight movement towards tighter conditions compared to last week.
- The yield curve is flat, with a marginal steepening observed from the previous period.
- Credit conditions show spread compression, with a high-yield spread in the lower percentile of historical ranges.
- The most notable shift is the slight tightening in financial conditions.
Growth × Inflation (GI)
The current Growth Acceleration × Inflation Reacceleration regime suggests an environment where both economic growth and inflation are picking up pace. The year-over-year growth in industrial production stands at 1.75%, with a three-month change indicating further acceleration. Inflation, as measured by the CPI, is at 3.03% year-over-year, with a slight increase over the past three months. This regime remains unchanged from the previous snapshot, indicating stability in the growth and inflation dynamics.
Financial Conditions (F)
Financial conditions are currently labeled as tight, reflecting a more restrictive environment compared to historical norms over the past decade. The federal funds rate is at 4.09%, and the two-year yield is at 3.51%, both contributing to the tight conditions. Compared to last week, the financial conditions score has moved slightly tighter, suggesting a marginal increase in restrictiveness.
Yield Curve (R)
The yield curve is flat, with a spread of 0.36 percentage points between the 10-year and 3-month yields. This flatness suggests a neutral stance in terms of future economic expectations. Compared to the past week, the curve has steepened slightly, moving from a spread of 0.35 percentage points. This change, while minor, could indicate subtle shifts in market expectations regarding growth and inflation.
Credit (C)
Credit conditions are characterized by spread compression, with the high-yield spread at 2.91%. The z-score of -1.03 indicates that the spread is below the long-run average, and the 5.96 percentile places it in the lower range of historical spreads. Compared to last week, there has been a slight compression in spreads, suggesting a continued favorable environment for credit.
Uncertainty and How to Verify Going Forward
This report outlines conditional tendencies rather than forecasts. Key metrics to track include the GI label and its core values, the financial-conditions score, the yield-curve spread, and the high-yield spread level and percentile. Monitoring these indicators over the coming months will provide insights into potential shifts in economic conditions. As always, this analysis is not a substitute for professional investment advice, and readers should consider their own circumstances before making financial decisions.
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