As of 2025-12-17, 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 looser conditions compared to last week.
- The yield curve is flat, with a slight steepening observed since the last report.
- Credit conditions show spread compression, with a z-score indicating a position below the long-run mean and a low percentile.
- The most notable shift is the slight steepening of the yield curve, which may suggest changing market expectations.
Growth × Inflation (GI)
The current regime of Growth Acceleration × Inflation Reacceleration suggests a period where economic growth is picking up alongside increasing inflationary pressures. 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 a consistent economic environment.
Financial Conditions (F)
Financial conditions are currently labeled as tight, reflecting a relatively restrictive environment compared to historical norms over the past decade. The federal funds rate is at 4.09%, with the two-year yield at 3.49%. Compared to the past snapshot, the financial conditions score has moved slightly looser, suggesting a marginal easing in the tightness of conditions. This shift, however, remains within the tight category, indicating continued vigilance in financial markets.
Yield Curve (R)
The yield curve is currently flat, with a spread of 0.34 percentage points between the 10-year and 3-month yields. This flatness suggests a balance between short-term and long-term interest rate expectations. Compared to the past, the curve has steepened slightly, moving from a spread of 0.31 percentage points. This change may reflect evolving market perceptions of future growth and inflation, although it remains within a flat configuration.
Credit (C)
Credit conditions are characterized by spread compression, with the high-yield spread at 2.99%. The z-score of -0.96 indicates that spreads are tighter than the long-run average, and the percentile of 7.69% places current conditions near the lower end of the historical range. Compared to the past, there has been further compression, as indicated by a lower z-score and percentile. This suggests a continued environment of relatively low credit risk premiums.
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 provide insights into potential shifts in economic and financial conditions. Readers should remain aware that this analysis does not constitute investment advice, and responsibility for investment decisions rests with the individual.
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