AutoPress Macro Report – December 1, 2025

TL;DR

• Growth × Inflation: Current regime is “Growth Acceleration × Inflation Reacceleration.”

• Financial, Yield-Curve, and Credit Regimes: Financial conditions remain tight, the yield curve is flat, and credit spreads are in a compressed state.

• Macro Regime: The combination of growth acceleration and inflation reacceleration has historically been associated with potential overheating risks.

• Financial Conditions: Currently tight, with a negligible movement towards easing since last week.
• Yield Curve: Remains flat, indicating cautious long-term expectations despite current growth and inflation dynamics.
• Credit Regime: High-yield spreads are significantly compressed, with a low percentile ranking in the past decade.
• Notable Change: The most significant shift is in the credit regime, where spreads have compressed further, reaching a lower historical percentile.

Growth × Inflation: Growth Acceleration × Inflation Reacceleration

The current regime indicates a simultaneous acceleration in both growth and inflation. The manufacturing production index shows a year-over-year growth rate of 1.18%, with a 3-month acceleration of 0.84 percentage points. Inflation, measured by the core CPI, is at 3.11% year-over-year, with a recent reacceleration of 0.35 percentage points compared to three months ago. This regime is unchanged from the past week, maintaining a pattern that in past cycles has sometimes coincided with overheating risks.

Financial Conditions: Tight

Financial conditions are currently tight, with the Federal Funds rate at 4.09% and the 2-year yield at 3.47%. The financial conditions score has slightly eased from 0.8716 to 0.8714, indicating a minor movement towards less restrictive conditions. Despite this, financial conditions remain on the tighter side, acting as a potential brake on the economy amidst the current growth and inflation dynamics.

Yield Curve: Flat

The yield curve remains flat, with a spread of 0.20 percentage points between the 10-year and 3-month yields. This flat shape has often been seen when long-term economic expectations are cautious or in transition phases. Compared to last week, the curve has flattened slightly, moving from a spread of 0.22 percentage points. Despite the current growth-inflation combination, the curve’s flatness has sometimes indicated cautious longer-term expectations.

Credit: Spread Compression

Credit markets are experiencing significant spread compression, with the high-yield spread at 2.94%, placing it in the 6th percentile of historical levels. The z-score of -1.01 indicates that current spreads are well below the 10-year average. Compared to last week, spreads have compressed further from 3.15% to 2.94%. In past episodes, such compressed spreads have sometimes been followed by periods of adjustment.

Conditional IF Scenarios (What tends to happen when similar states persist)

• If the current combination of “Growth Acceleration × Inflation Reacceleration” persists for several months, historical episodes with similar conditions have sometimes been followed by a tightening of financial conditions as central banks react to overheating risks.
• If tight financial conditions continue, it has often been associated with slower economic activity, as borrowing costs remain elevated.
• Should the yield curve remain flat, it is not uncommon in past cycles for this to coincide with cautious long-term growth expectations, possibly foreshadowing economic slowdowns.

Uncertainty and How to Verify Going Forward

This report is based solely on today’s snapshot and expresses conditional tendencies, not forecasts. Key metrics to track going forward include:

• Growth × Inflation: Current regime label and values (growth YoY at 1.18%, inflation YoY at 3.11%).
• Financial Conditions: Score at 0.8714.
• Yield Curve: Spread at 0.20 percentage points.
• Credit Conditions: High-yield spread level at 2.94% and percentile at 6.23%.

Readers may evaluate these tendencies over the coming months to assess how conditions evolve. This article does not constitute financial advice, and investment decisions remain the reader’s responsibility.
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