As of 2025-12-11, 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 suggests a continuation of growth acceleration and inflation reacceleration, with stable growth and inflation metrics.
- Financial conditions remain tight, with a slightly lower score compared to last week, indicating a marginal loosening.
- The yield curve remains flat, with a slight steepening observed as the spread increased.
- Credit conditions show spread compression, with a z-score indicating conditions are well below the long-run mean.
- The most notable shift is the slight steepening of the yield curve, suggesting a minor change in market expectations.
Growth × Inflation (GI)
The current Growth Acceleration × Inflation Reacceleration regime indicates a period where both economic growth and inflation are picking up pace. The year-over-year growth in GDP is at 1.75%, with a three-month change of 1.12%, suggesting a stable growth trajectory. Inflation, as measured by the CPI, is at 3.03% year-over-year, with a slight increase over the past three months by 0.12%. This regime remains unchanged from the previous week, indicating consistent economic conditions.
Financial Conditions (F)
Financial conditions are currently labeled as tight, which suggests that borrowing costs and financial market conditions are more restrictive compared to historical norms over the past decade. The federal funds rate is at 4.09%, and the two-year yield is at 3.52%. The financial conditions score has moved slightly lower from 0.885 to 0.882, indicating a marginal loosening compared to last week. This suggests a slight easing in the tightness of financial conditions.
Yield Curve (R)
The yield curve is currently flat, with a spread of 0.32 percentage points between the 10-year and 3-month yields. This flatness suggests that the market is uncertain about future economic growth and inflation. Compared to last week, the spread has increased slightly from 0.29 percentage points, indicating a minor steepening. This change could reflect a slight shift in market expectations regarding future interest rates or economic conditions.
Credit (C)
Credit conditions are characterized by spread compression, with a high-yield spread level at 2.88%. The z-score of -1.06 indicates that credit spreads are significantly below the long-run average, placing them in the 5th percentile of the past decade. This suggests that credit markets are relatively favorable, with lower risk premiums required by investors. Compared to last week, there is little change, indicating stable credit conditions.
Uncertainty and How to Verify Going Forward
This report outlines 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. As always, this analysis is informational and should not be construed as investment advice.
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