Research.LeutholdGroup

Last month, we noted that Jay Powell’s preferred measure of the yield curve—Near Term Forward Spread (NTFS)—was a winner, but a newly introduced index by the Fed, “Financial Conditions Impulse on Growth (FCI-G),” is a dud. Several simple forecasting gauges we’ve relied on for years are considerably more effective.

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Future economists learning of zero interest rates and Fed balance-sheet expansion during the 2021 inflation surge may wonder if policymakers were “on” something. Jay Powell is clearly “onto” something with his focus on a measure that few are familiar with: the Near-Term Forward Spread (NTFS).

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