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 Growth Acceleration × Inflation Reacceleration regime has historically tended to indicate robust economic activity with rising price pressures.
- Financial conditions are moving somewhat tighter compared to the past week, with a slight increase in the financial conditions score.
- The yield curve remains flat, with a slight steepening observed as the spread increased.
- Credit conditions show spread compression, with the high-yield spread in the lower 5th percentile, indicating relatively favorable credit conditions.
- The most notable shift from the past is the slight steepening of the yield curve.
Growth × Inflation (GI)
The current regime of Growth Acceleration × Inflation Reacceleration suggests a period where economic growth is picking up alongside rising inflationary pressures. The year-over-year growth in industrial production is 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 a consistent economic environment.
Financial Conditions (F)
Financial conditions are currently labeled as tight, which suggests that borrowing costs and financial market conditions are more restrictive than usual. The federal funds rate is at 4.09%, and the two-year yield is at 3.61%, both indicating a relatively high-interest rate environment. Compared to the past week, financial conditions have moved somewhat tighter, as reflected by a slight increase in the financial conditions score from 0.88 to 0.91.
Yield Curve (R)
The yield curve is currently flat, with a spread of 0.36 percentage points between the 10-year and 3-month yields. This flatness suggests a cautious outlook on future economic growth. Compared to the past, the yield curve has steepened slightly, as the spread has increased from 0.27 percentage points. This change may reflect shifting expectations about future interest rates or economic conditions, but it remains within a flat configuration.
Credit (C)
Credit conditions are characterized by spread compression, with the high-yield spread at 2.89%. The z-score of -1.05 indicates that the spread is significantly below its long-run average, and the percentile rank of 5.42% places it in the lower range of the past decade. Compared to the previous snapshot, the high-yield spread has compressed slightly, moving from 2.92% to 2.89%, suggesting continued favorable conditions for borrowers in the high-yield market.
Uncertainty and How to Verify Going Forward
This report reflects conditional tendencies based on current data, not 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 help assess shifts in economic conditions. Readers should note that this analysis does not constitute investment advice, and they should consider their own circumstances when making financial decisions.
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