Dow went up 106, decliners over advancers 3-2 & NAZ gave back 10. The MLP index added 3+ to 302 & the REIT index was up 1 to 391. Junk bond funds eased lower & Treasuries remained little changed keeping yields flattish. Oil was off almost 1 to the low 73s on late day selling & gold gained 9 to 2674 (more on both below).

Dow Jones Industrials

Federal Reserve officials at their Dec meeting expressed concern about inflation & the impact that Pres-elect Dec meeting's policies could have, indicating that they would be moving more slowly on interest rate cuts because of the uncertainty. Without calling out Trump by name, the meeting summary featured at least 4 mentions about the impact that changes in immigration & trade policy could have on the US economy. Since Trump's Nov election victory, he has signaled plans for aggressive, punitive tariffs on China, Mexico & Canada as well as the other US trading partners. In addition, he intends to pursue more deregulation & mass deportations. However, the extent of what Trump's actions will be & specifically how they will be directed creates a band of ambiguity about what is ahead, which Federal Open Market Committee (FOMC) members said would require caution. “Almost all participants judged that upside risks to the inflation outlook had increased,” the minutes said. “As reasons for this judgment, participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy.“ FOMC members voted to lower the central bank's benchmark borrowing rate to 4.25%-4.50%. However, they also reduced their outlook for expected cuts in 2025 to 2 from 4 in the previous estimate at Sep's meeting, assuming qtr-point increments. The Fed cut a full point off the funds rate since Sep, & current market pricing is indicating just 1 or 2 more moves lower this year. Minutes indicated that the pace of cuts ahead indeed is likely to be slower. “In discussing the outlook for monetary policy, participants indicated that the Committee was at or near the point at which it would be appropriate to slow the pace of policy easing,” the document said. Moreover, members agreed that “the policy rate was now significantly closer to its neutral value than when the Committee commenced policy easing in September. In addition, many participants suggested that a variety of factors underlined the need for a careful approach to monetary policy decisions over coming quarters.“ Those conditions include inflation readings that remain above the Fed's 2% annual target, a solid pace of consumer spending, a stable labor market & otherwise strong economic activity in which gross domestic product had been growing at an above-trend clip thru 2024. “A substantial majority of participants observed that, at the current juncture, with its policy stance still meaningfully restrictive, the Committee was well positioned to take time to assess the evolving outlook for economic activity and inflation, including the economy’s responses to the Committee’s earlier policy actions,” the minute said. Officials stressed that future policy moves will be dependent on how the data unfolds & are not on a set schedule. The Fed's preferred gauge showed core inflation running at 2.4% rate in Nov & 2.8% when including food & energy prices, compared with the prior year. The Fed target’s inflation at 2%.

Fed officials are worried about the inflation impacts from Trump’s policies, minutes show

The US is at risk of hitting an impasse over the debt limit with congressional Reps dealing with a threadbare majority in the House of Representatives, the Fitch Ratings agency warned in a report. "The U.S. faces significant policy challenges in 2025 relating to the debt limit, appropriations, and tax cuts in the context of already large deficits and an increasing debt burden," Fitch wrote. "We think it is unlikely that debate to increase or suspend the debt limit will be resolved early in 2025 given the significant disagreements on spending policies in Congress." "A pre-Christmas government shutdown was only averted at the last minute, after a contentious debate around President-elect Donald Trump's insistence that funding be tied to a fresh suspension/increase of the debt limit, and disagreements over certain spending items," Fitch explained. Congress most recently raised the debt limit in 2023, when the Fiscal Responsibility Act suspended the debt limit thru Jan 1, 2025, & imposed spending caps on discretionary spending. It will likely have to act on a new increase or suspension of the debt limit this spring or summer to prevent the federal gov from defaulting on its debt. Earlier this month, the Treasury Dept estimated that the new debt limit will become binding between Jan 14-23 — which will prompt the agency to use accounting maneuvers known as "extraordinary measures" to avoid a default & fund federal obligations for a period of several months until those tools are exhausted. It's unclear precisely how long those extraordinary measures will last, but Fitch analysts wrote that they believe the "x-date" could fall as late as Jul or Aug, giving lawmakers several months to deal with the debt limit. Aside from the debt limit, Congress will need to pass a gov funding bill by Mar 14 to prevent a partial shutdown from occurring by enacting either a short-term continuing resolution or appropriations bills. That debate may include discussion of extending the discretionary spending caps that expire in Sep & could occur against the backdrop of negotiations on the extension of the 2017 tax cuts & related reforms Reps plan to pursue through the budget reconciliation process.

Credit rating agency warns of congressional debt limit stalemate despite GOP majority

Many Americans are starting 2025 a little worse off than before, at least when it comes to credit card debt. Almost ½ of cardholders, 48%, now carry debt from month to month, according to a new report by Bankrate. That's up from 44% at the start of 2024. Of those carrying balances, 53% have been in debt for at least a year. Roughly 47% of borrowers said they carry a balance due to an unexpected or emergency expense, most commonly medical bills or car & home repairs. Others cite higher day-to-day expenses & general overspending. “High inflation and high interest rates have been a nasty combination, and while the worst is behind us, the cumulative effects are significant and will linger,” Ted Rossman, Bankrate's senior industry analyst, said. Overall, Americans’ credit card tab has continually crept higher. The average balance per consumer now stands at $6380, up 4.8% year over year, according to the latest credit industry insights report from TransUnion from 2024's 3rd qtr. Meanwhile, 36% of consumers added to their debt load over the holiday season, according to a separate report by LendingTree. Of those with debt, 21% expect it’ll take 5 months or longer to pay it off, LendingTree found. According to another report by WalletHub, 24% of Americans said they will need more than 6 months to pay off their holiday shopping debt. In that survey, most consumers said inflation caused them to spend more than they initially planned. “Many people need months to repay holiday bills after overspending,” said John Kiernan, editor at WalletHub.

At the start of 2025, nearly half of credit card users are carrying debt

Gold prices hit a near 4-week high after a weaker-than-expected private employment report for Dec provided reassurance for some in the market the Federal Reserve may be less cautious about easing rates this year. Spot gold rose 0.3% to $2657 per ounce & hit its highest since Dec 13. US gold futures settled 0.3% higher at $2672. Weaker private payrolls is contributing to gold's move, because ultimately, weaker employment numbers imply that the economy has been weaker than many had expected. Traders are on edge ahead of Fri's key US labor data & Donald Trump's Jan 20 inauguration, with expectations of a flurry of policy moves marking the start of his 2nd presidency. Minutes from the Federal Reserve's Dec 17-18 meeting revealed officials expect inflation to ease this year but acknowledged the risk of stubborn price pressures, particularly as they assess the potential impact of Trump's policies.

Gold climbs after weaker-than-expected private payrolls data

Oil prices rose as supplies from Russia & OPEC members tightened while data showing an unexpected rise in US job openings pointed to expanding economic activity & growing demand for oil as a result. Brent crude rose 37¢ (0.5%) to $77.42 a barrel & US West Texas Intermediate crude rose 44¢ (0.6%) to $74.69. Oil output from the Organization of the Petroleum Exporting Countries fell in Dec after 2 months of increases. Field maintenance in the United Arab Emirates offset a rise in Nigerian output & increases elsewhere in the group. In Russia, oil output averaged 8.9M barrels per day in Dec, below the country's target. On the economic front, job openings rose in the US in Nov & layoffs were low, while workers were reluctant to quit, the Job Openings & Labor Turnover Survey showed. Strong US economic data continues to support the outlook for the US economy & oil demand, further supported by a larger-than-anticipated draw in crude inventories. US crude stockpiles fell last week while fuel inventories rose, citing figures from the American Petroleum Institute.

Oil prices rise on tighter OPEC supplies

Stocks were lower as investors absorbed a report that featured Pres-elect Donald Trump's unknown economic policies & proposed tariffs. Minutes from the Federal Reserve's Dec meeting showed "many" officials supported a gradual pace of interest rate cuts in 2025. Fears of nervous investors were not eased after reading comments in the notes from the meeting. The Dow chart has been trending sideways for about a month (show above).