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 Growth Acceleration × Inflation Reacceleration regime has historically tended to indicate robust economic activity with rising price pressures.
- Financial conditions remain tight, with a slight movement towards tighter conditions compared to last week.
- The yield curve is flat, with a slight steepening observed from the previous week.
- Credit conditions show spread compression, with a z-score indicating conditions are significantly below the long-run average.
- The most notable shift is the slight steepening of the yield curve, suggesting a marginal change in market expectations.
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 week, indicating a consistent economic environment.
Financial Conditions (F)
Financial conditions are currently tight, which typically implies higher borrowing costs and potentially restrictive access to capital. The federal funds rate is at 4.09%, and the two-year yield is at 3.52%, both contributing to the tight conditions. Compared to last week, the financial conditions score has moved slightly tighter, suggesting a marginal increase in financial market constraints.
Yield Curve (R)
The yield curve is flat, with a spread of 0.32 percentage points between the 10-year and 3-month yields. This flatness often reflects uncertainty about future economic growth and inflation. Compared to last week, the curve has steepened slightly, moving from a spread of 0.29 percentage points. This change may indicate 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 of 2.88%. The z-score of -1.06 suggests that current spreads are significantly tighter than the long-run average, placing them in the 5th percentile of the past decade. Compared to last week, there is little change, indicating stable credit conditions with continued tight spreads.
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 provide insights into potential shifts in economic conditions. As always, this analysis is informational and should not be construed as investment advice.
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