Evaluating Economic Forecasting Tools: Yield Curve vs PMI

In the preparation of the annual economic outlook for a diversified investment portfolio, your firm utilizes various forecasting tools to assess future macroeconomic conditions. Recently, the chief economist has suggested focusing on the yield curve as a primary forecasting tool, arguing that it offers insights into potential future economic activity based on interest rate spreads. In contrast, another analyst proposes using Purchasing Managers' Index (PMI) data as a forward-looking indicator of economic expansion or contraction. As the lead portfolio manager, your task is to evaluate the effectiveness of these tools.

Which of the following statements accurately reflects the strengths of using the yield curve and PMI data as forecasting tools?