Category: Economy

Fed Holds the Line: Officials Want More Proof Inflation Is Cooling Before Cutting Rates

Posted on by slightbourne@noblecapitalmarkets.com

Minutes from the latest meeting of the Federal Open Market Committee (FOMC) show a central bank increasingly cautious about cutting interest rates further, with most officials signaling they want clearer evidence that inflation is moving sustainably toward their 2% target before easing policy again.

At its Jan. 27–28 meeting, the policy-setting arm of the Federal Reserve voted to hold its benchmark interest rate steady at roughly 3.6%, following three rate cuts late last year. While two officials dissented in favor of another quarter-point reduction, the overwhelming majority agreed that the current rate is close to “neutral” — neither stimulating nor restraining economic growth.

The minutes, released Wednesday, reveal a committee divided into several camps. “Several” participants indicated that additional cuts would likely be appropriate if inflation continues to decline. However, “some” favored holding rates unchanged for an extended period, reflecting concerns that price pressures remain too elevated. A smaller group even expressed openness to signaling that the Fed’s next move could be either a rate cut or a hike, depending on incoming data — a notable shift from prior meetings when further tightening was largely ruled out.

Fed Chair Jerome Powell struck a measured tone following the January meeting, emphasizing that the central bank is “well positioned” to assess how economic conditions evolve before making additional adjustments. Powell pointed to signs of stabilization in the labor market and a still-expanding economy as justification for patience.

Recent economic data appear to reinforce that cautious stance. Consumer prices rose 2.4% in January compared with a year earlier, not far from the Fed’s target. Yet the central bank’s preferred inflation gauge — the personal consumption expenditures (PCE) index — is running closer to 3%, suggesting underlying price pressures remain sticky. Officials made clear in the minutes that they want greater confidence inflation is moving decisively lower before resuming rate cuts.

At the same time, the labor market has shown renewed resilience. Employers added 130,000 jobs in January, the strongest monthly gain in more than a year, while the unemployment rate edged down to 4.3%. Many officials described the job market as stabilizing after some softening in late 2025. Because rate cuts are typically deployed to prevent rising unemployment or stimulate slowing growth, the improving labor backdrop reduces the urgency for immediate action.

The Fed’s decision to stand pat also came despite public pressure from President Donald Trump, who has called for significantly lower rates. Policymakers, however, signaled they remain focused on their dual mandate of price stability and maximum employment rather than political considerations.

Markets are now recalibrating expectations for 2026. Earlier forecasts anticipated multiple rate cuts this year, but the tone of the minutes suggests the path forward will depend heavily on inflation data in the coming months. If price growth stalls above 2%, the Fed may extend its pause. If inflation resumes its downward trend, gradual cuts could still materialize.

For now, the message from the FOMC is clear: the battle against inflation is not yet fully won, and patience — not haste — will guide the next move in U.S. monetary policy.

Strait of Hormuz Partially Closed as Iran Holds Nuclear Talks with U.S.

Posted on by slightbourne@noblecapitalmarkets.com

Iran on Tuesday announced a partial and temporary closure of the Strait of Hormuz, one of the world’s most strategically important oil chokepoints, as the country conducts military drills in the waterway. The move comes as Tehran and the United States hold renewed nuclear negotiations in Geneva, raising tensions across global energy markets.

According to Iranian state media, the closure is tied to a Revolutionary Guard exercise described as a “Smart Control” drill aimed at strengthening operational readiness and reinforcing deterrence capabilities. Officials characterized the move as precautionary and temporary, designed to ensure shipping safety during live-fire activities in designated areas of the strait.

The Strait of Hormuz is a narrow but critical passage linking oil producers in the Middle East with key markets in Asia, Europe, and beyond. Roughly 13 million barrels per day of crude oil passed through the waterway in 2025, accounting for approximately 31% of global seaborne crude flows, according to market intelligence firm Kpler. Any disruption — even a short-term one — carries significant implications for global energy security and oil price stability.

Markets reacted swiftly to the news, though the response was measured. Oil prices initially climbed on fears of supply interruptions but later pared gains as reports indicated that shipping delays would likely be minimal and temporary. Brent crude futures fell 1.8% to $67.48 per barrel, while U.S. West Texas Intermediate slipped 0.4% to $62.65.

Shipping industry representatives suggested the impact would likely be limited. The live-fire exercise overlaps with part of the inbound traffic lane of the strait’s Traffic Separation Scheme, prompting vessels to avoid the area for several hours. Given heightened geopolitical tensions in the region, commercial shipping operators are expected to comply fully with Iranian guidance to minimize risk.

The timing of the maneuver is particularly significant. It marks the first partial shutdown of the strait since January, when U.S. President Donald Trump threatened potential military action against Tehran. The renewed nuclear discussions in Geneva are aimed at resolving long-standing disputes over Iran’s nuclear program. Iranian officials indicated that both sides reached an understanding on certain guiding principles during the talks, though substantial work remains before any formal agreement is achieved.

Energy markets remain sensitive to developments in the region. The combination of diplomatic negotiations and visible military positioning has heightened uncertainty, even as oil supply continues to flow. While Tuesday’s closure appears temporary and controlled, it serves as a reminder of how quickly geopolitical risks can ripple through commodity markets.

For investors and policymakers, the episode reinforces a broader truth: chokepoints like the Strait of Hormuz represent both physical and psychological pressure points in the global energy system. Even limited disruptions can trigger volatility, particularly when layered on top of fragile diplomatic dynamics.

As negotiations continue, traders will closely monitor shipping flows, military activity, and official statements from both Tehran and Washington. In a world where energy markets remain tightly interconnected, stability in the Strait of Hormuz is not just a regional concern — it is a global one.

Inflation Cools to 2.4% in January, Beating Expectations as 2026 Begins

Posted on by slightbourne@noblecapitalmarkets.com

American consumers received welcome news to start 2026 as inflation slowed more than anticipated in January, offering fresh optimism about the economy’s trajectory and easing concerns about rising prices that have plagued households for years.

The Bureau of Labor Statistics reported Friday that the Consumer Price Index rose just 0.2% in January from the previous month, with annual inflation declining to 2.4% from December’s 2.7%. The figures came in below economist expectations of a 0.3% monthly increase and 2.5% annual rise, marking encouraging progress in the ongoing battle against elevated prices.

Core Inflation Hits Multi-Year Low

Perhaps most significantly, core inflation—which strips out volatile food and energy costs to reveal underlying price trends—registered its slowest annual increase since March 2021. Core prices climbed 2.5% over the past year while rising 0.3% month-over-month, both meeting expectations but signaling sustained moderation in inflationary pressures.

The positive inflation data represented the second encouraging economic report this week. Wednesday’s employment figures showed unemployment ticking downward while payrolls expanded at double the anticipated pace, suggesting the economy remains resilient even as price pressures ease.

Economic analysts noted that the softer-than-expected reading was particularly noteworthy given historical patterns. Recent years have typically seen inflation spike unexpectedly in January due to residual seasonal factors and delayed price adjustments stemming from pandemic-era disruptions. The absence of these typical January surprises suggests that tariff-induced price increases on goods may be largely complete, offering hope for more stable pricing ahead.

Despite the overall positive trends, certain categories continue challenging household budgets. Food prices climbed 2.9% annually, with cereals and bakery products jumping 1.2% in January alone. Coffee and beef prices remained especially elevated throughout the past year, though beef and veal saw a modest 0.4% monthly decline. Egg prices, another closely watched staple, dropped 7% after surging in recent months.

Energy costs provided significant relief, falling 1.5% in January as fuel oil plunged 5.7% and gasoline decreased 3.2%. The national average for regular gasoline now sits at $2.94, down from $3.16 a year ago, according to AAA data.

Housing costs, the largest component of most household budgets, rose 0.2% monthly and 3% annually. While still elevated, the shelter index increased at half December’s pace, potentially signaling improvement ahead for renters and homeowners alike.

Analysts had closely watched January’s data for signs of tariff-related price increases following President Trump’s sweeping levies implemented last year. While some tariff-sensitive categories showed increases—apparel rose 0.3%, video and audio products jumped 2.2%, and computers climbed 3.1%—the overall impact appeared muted.

Economic forecasters had anticipated that core goods prices would accelerate from December levels due to increased tariff pass-through effects and typical seasonal patterns that push January inflation higher. However, the fact that core goods prices remained unchanged in January suggests that tariffs and unseasonably large price hikes were not significant drivers of the monthly inflation reading.

One notable exception: airline fares surged 6.5% monthly, meaning travelers may want to consider road trips over flights in the near term. Used car prices, meanwhile, slid 1.8%, offering potential savings for vehicle shoppers.

The cooler-than-expected inflation data strengthens the case for continued economic stability as 2026 unfolds, though Federal Reserve policymakers will carefully monitor upcoming reports before making decisions about interest rates.

January Jobs Report Beats Expectations, but Annual Revisions Reveal Slowing Labor Market

Posted on by slightbourne@noblecapitalmarkets.com

The US labor market delivered a surprise to the upside in January, adding 130,000 jobs — roughly double economists’ expectations — while the unemployment rate edged down to 4.3%, according to Labor Department data released Wednesday.

Economists surveyed ahead of the report had forecast a gain of around 65,000 jobs, though estimates varied widely, ranging from modest growth to outright job losses. Instead, payroll growth came in near the top end of projections, offering a near-term boost to confidence about the resilience of the labor market.

But beneath the headline strength, substantial downward revisions to last year’s data paint a much weaker picture of overall job creation. Updated figures show the economy added just 181,000 jobs for the entirety of 2025 — sharply revised down from the previously reported 584,000. That marks the slowest pace of annual job growth outside of a recession since 2003.

On average, the economy added only about 15,000 jobs per month last year, underscoring the extent of the slowdown. Revisions also shaved gains from the final months of 2025, with November payroll growth lowered to 41,000 from 56,000 and December reduced slightly to 48,000.

The report was initially scheduled for release last Friday but was delayed by a brief partial government shutdown, heightening anticipation among investors and policymakers. January’s report is often closely watched because it includes annual benchmark revisions that incorporate more complete data from unemployment insurance tax records and other sources. This year’s revisions showed that for the 12 months ending in March 2025, the economy added 898,000 fewer jobs than previously estimated — a significant adjustment, though slightly improved from an earlier estimate of 911,000 fewer jobs.

The January rebound comes after private-sector data suggested a bruising start to the year for job seekers, with limited hiring activity reported in early surveys. The stronger-than-expected payroll figure may ease some immediate concerns, but the broader trend suggests a labor market that has cooled considerably from the rapid hiring pace seen in previous years.

Administration officials have sought to temper expectations around job growth, arguing that slower hiring may reflect structural changes rather than economic weakness. They point to a shrinking labor force, driven in part by stricter immigration policies, as well as productivity gains that allow companies to expand output without significantly increasing headcount.

The unemployment rate’s slight decline to 4.3% indicates continued stability in the job market, with layoffs remaining relatively contained. However, the sharp downward revisions raise questions about how much underlying momentum remains in the economy.

For markets and policymakers, the report presents a mixed signal. January’s job gains suggest that the labor market retains pockets of strength, but the broader revisions confirm that hiring slowed dramatically last year. As the Federal Reserve evaluates the path of interest rates, the balance between cooling job growth and stable unemployment will be a key factor in determining whether the economy can maintain steady expansion without reigniting inflationary pressures.

The January report may have exceeded expectations, but the longer-term trend signals a labor market that is steady — not surging — and increasingly dependent on productivity and structural shifts rather than rapid hiring to drive growth.

Trump Welcomes Weaker Dollar as Currency Hits Four-Year Low

Posted on by slightbourne@noblecapitalmarkets.com

The U.S. dollar has tumbled to its lowest level since early 2022, and President Trump’s dismissive response to the decline is accelerating a major shift in global currency markets. When reporters asked if he was concerned about the weakening currency, Trump replied, “No, I think it’s great,” sending the greenback into a fresh spiral that has investors reassessing their exposure to American assets.

A Currency in Free Fall

The Bloomberg Dollar Spot Index has plunged nearly 10% since Trump’s inauguration and is on track for its worst monthly performance since April. The decline intensified after Trump’s comments, with the dollar weakening against all major counterparts. Trading volumes hit record levels as market participants rushed to adjust positions in what has become one of the most dramatic currency moves in recent years.

This isn’t just a technical market correction. Trump’s remarks represent a clear policy signal that his administration is comfortable with—or actively seeking—a weaker dollar to boost American manufacturing and export competitiveness. The cabinet appears unified on this approach, with economists noting they’re taking a calculated gamble that currency weakness will help domestic industries without triggering broader instability.

The Great Rotation Accelerates

What makes this dollar decline particularly significant is the context in which it’s occurring. Despite rising government bond yields and expectations that the Federal Reserve will pause rate cuts this week—factors that typically support a currency—the dollar continues falling. This suggests deeper forces at work beyond standard monetary dynamics.

Investors are responding by fleeing to alternatives. Gold has surged to record highs as part of what traders are calling the “debasement trade.” Emerging market funds are receiving record inflows as momentum builds for a rotation away from U.S. assets. Some analysts have dubbed this shift “quiet-quitting” American holdings, as overseas investors gradually reduce their exposure to dollar-denominated investments.

The policy uncertainty driving this exodus is unmistakable. Trump’s erratic decision-making—from threatening to seize Greenland to pressuring the Federal Reserve, implementing deficit-expanding tax cuts, and deepening political polarization—has rattled international confidence in American stability.

The Risks of a Weak Dollar

While a declining currency does make American exports more competitive, the potential dangers are substantial. The United States carries nearly $40 trillion in debt, and currency instability makes it harder to attract buyers for Treasury bonds. As one Goldman Sachs executive noted, with debt levels this high, currency stability probably matters more than export advantages.

The market is pricing in further weakness ahead. Options traders are positioning for additional dollar declines at levels not seen since 2011, suggesting expectations that this trend has room to run.

Trump himself has sent mixed signals, historically praising dollar strength while acknowledging that weakness “makes you a hell of a lot more money.” He even suggested he could manipulate the currency “like a yo-yo,” though he framed such volatility as undesirable while criticizing Asian economies for past devaluation efforts.

What This Means for Investors

The dollar’s decline is reshaping the investment landscape across asset classes. Export-oriented companies stand to benefit from improved competitiveness, while businesses reliant on imports or foreign-denominated debt face headwinds. The key question is whether this weakness remains orderly or spirals into instability.

For now, the Trump administration appears willing to test how far the dollar can fall without triggering a crisis. That calculated risk is playing out in real time, with profound implications for portfolios worldwide.

Fed Holds Rates Steady in Split Decision as Pressure Mounts

Posted on by slightbourne@noblecapitalmarkets.com

The Federal Reserve paused its rate-cutting campaign Wednesday, holding its benchmark interest rate at 3.5% to 3.75% after three consecutive cuts. But the decision was far from unanimous, with two officials breaking ranks in a rare display of division that underscores the difficult position facing the central bank.

Fed Governors Chris Waller and Stephen Miran dissented from the majority, voting instead for an additional quarter-point rate cut. The split is particularly significant given Waller’s status as one of President Trump’s finalists to replace current Fed Chair Jerome Powell, whose term expires in May. Waller has expressed ongoing concerns about weakness in the labor market, suggesting the Fed risks waiting too long to provide additional support.

The disagreement comes as the Fed navigates conflicting economic signals. Officials upgraded their economic assessment to “solid” from “moderate,” pointing to strong GDP growth in recent quarters. They also softened their language on employment risks, removing previous warnings that “downside risks to employment rose in recent months.” The committee now simply states it remains “attentive to the risks to both sides of its dual mandate.”

Yet the underlying data tells a more complicated story. December payroll growth remained weak, though the unemployment rate did improve to 4.4% after ticking up in November. The Fed had cut rates three times last year specifically to cushion soft job numbers, making the current pause a bet that those cuts have already done enough.

Inflation remains the stickier problem. Core Consumer Price Index inflation held at 2.6% in December, unchanged since September. The Fed’s preferred inflation gauge—core Personal Consumption Expenditures—registered 2.8% in November, well above the central bank’s 2% target. That reading was delayed due to lingering effects from last fall’s government shutdown.

These persistent inflation readings complicate any argument for additional rate cuts, even as some officials worry about labor market deterioration. The Fed’s statement emphasized that future decisions will depend on “incoming data, the evolving outlook, and the balance of risks,” keeping all options on the table without providing clear forward guidance.

The rate hold also comes amid unprecedented tensions between the White House and the Fed. Trump has repeatedly called for lower interest rates, and the relationship between the administration and the central bank has deteriorated sharply. Powell revealed earlier this month that the White House has opened a criminal investigation into testimony he gave last summer regarding the Fed’s headquarters renovation—an extraordinary move that raises serious questions about central bank independence.

Trump is expected to name Powell’s replacement soon, adding another layer of uncertainty to an already murky policy outlook. The criminal probe appears designed to undermine Powell’s credibility as his term winds down, representing a level of political interference rarely seen in the Fed’s modern history.

For markets, the split vote and political pressure signal continued uncertainty ahead. The Fed faces no easy path forward: cut rates too aggressively and inflation could accelerate, but wait too long and employment could weaken further. With leadership changes looming and political tensions escalating, investors should prepare for a bumpy road as the central bank tries to navigate these crosscurrents while maintaining its independence.

Trump Walks Back Europe Tariffs After Greenland Talks Yield Deal Framework

Posted on by slightbourne@noblecapitalmarkets.com

President Donald Trump abruptly reversed course on proposed tariffs against European nations on Wednesday, announcing he would suspend the planned measures after reaching what he described as a “framework of a future deal” related to Greenland and broader Arctic cooperation.

In a post on Truth Social, Trump said the agreement-in-principle followed discussions with NATO Secretary General Mark Rutte and would benefit both the United States and its allies. As a result, the tariffs that were scheduled to take effect on February 1 will no longer move forward, easing market tensions that had flared over the past several days.

“This solution, if consummated, will be a great one for the United States of America, and all NATO Nations,” Trump wrote, adding that further details would be released as negotiations progress.

The announcement marked a sharp shift from Trump’s weekend threat to impose 10% tariffs on eight European countries that he claimed were obstructing U.S. efforts to pursue a deal involving Greenland, with rates set to rise to 25% by June if no agreement was reached. The proposed tariffs would have applied broadly to all goods imported from the affected nations, sparking fears of renewed transatlantic trade conflict.

Those concerns quickly reverberated through financial markets, contributing to volatility as investors weighed the prospect of escalating tariffs between long-standing allies. European leaders responded forcefully, with the European Parliament freezing a ratification vote on a U.S.–EU trade agreement and EU officials reportedly exploring retaliatory tariffs on up to $108 billion worth of American exports.

Trump’s reversal helped stabilize sentiment, at least temporarily, by removing the immediate threat of trade disruption.

The tariff dispute stemmed from Trump’s renewed push for negotiations over Greenland, a Danish territory with growing strategic importance due to its location and natural resources. Speaking earlier Wednesday at the World Economic Forum in Davos, Trump called for “immediate negotiations” while signaling he was ruling out the use of military force.

His comments walked a careful line—pressing European partners for cooperation while stopping short of overt escalation. “You can say yes, and we will be very appreciative, or you can say no, and we will remember,” Trump said, underscoring the pressure campaign that preceded the tariff threats.

While details of the Greenland framework remain scarce, Trump indicated the discussions would extend beyond Greenland itself to include broader Arctic coordination, an area of increasing geopolitical competition.

The episode unfolded against ongoing legal uncertainty surrounding Trump’s global tariff authority. The U.S. Supreme Court has so far declined to issue rulings this year on challenges to the legality and scope of his trade duties, leaving unresolved questions about executive power in trade policy.

Trump said Vice President JD Vance, Secretary of State Marco Rubio, and Special Envoy Steve Witkoff will lead negotiations going forward. He also praised NATO allies for increasing defense spending, a recurring theme in his foreign policy messaging.

For now, the suspension of tariffs offers breathing room for markets and diplomats alike. But with negotiations still incomplete, investors and U.S. allies will be watching closely to see whether the “framework” evolves into a durable agreement—or another flashpoint in an increasingly unpredictable trade landscape.

Trump Suggests Using Trade Penalties to Pressure Support for Greenland Plan

Posted on by slightbourne@noblecapitalmarkets.com

President Donald Trump said Friday that he may impose new tariffs on foreign countries as part of an aggressive effort to pressure allies into supporting U.S. acquisition of Greenland, once again turning to trade penalties as a geopolitical bargaining tool.

Speaking at the White House during a health care–related event, Trump framed Greenland as a national security imperative and suggested tariffs could be used against countries that resist his ambitions. “We need Greenland for national security,” Trump said. “So I may do that. I may put a tariff on countries if they don’t go along with Greenland.”

The comments mark a significant escalation in Trump’s long-running interest in acquiring the Arctic territory, which is an autonomous region of Denmark. While the U.S. already maintains a military base on the island, Trump has increasingly argued that outright ownership is necessary to counter growing influence from China and Russia in the Arctic.

The White House did not immediately clarify which countries could be targeted by the proposed tariffs or what form they might take. However, Trump’s remarks signal that trade policy may once again be deployed as leverage in diplomatic disputes, even those involving close U.S. allies.

Trump’s tariff threat comes amid mounting legal uncertainty surrounding his broader trade agenda. The president has dramatically expanded the use of tariffs since returning to office, pushing the average U.S. tariff rate to an estimated 17%. Many of these levies were imposed under the International Emergency Economic Powers Act (IEEPA), a move that has been repeatedly challenged in court.

Multiple lower courts have ruled that Trump exceeded his authority under IEEPA, and the issue is now before the Supreme Court. A ruling from the high court could come soon and may determine whether the administration can continue imposing wide-ranging tariffs without congressional approval. Trump has warned that his economic agenda would be severely undermined if the court rules against him.

The Greenland comments also follow Trump’s recent use of tariff threats to pressure foreign governments on pharmaceutical pricing. The president has argued that U.S. drug prices should be aligned with lower prices paid overseas and said he warned foreign leaders to raise their prices or face steep tariffs on all exports to the United States.

“I’ve done it on drugs,” Trump said Friday. “I may do it for Greenland too.”

Despite Trump’s rhetoric, both Greenland and Denmark have repeatedly rejected the idea of a sale or transfer of sovereignty. Following meetings in Washington this week with Vice President JD Vance and Secretary of State Marco Rubio, a delegation from Greenland and Denmark said they maintain a “fundamental disagreement” with the president’s position.

Trump has also previously suggested that the U.S. is weighing multiple options to secure Greenland, including economic pressure and, in extreme rhetoric, military considerations. Those statements have alarmed European allies and raised concerns about the long-term implications for NATO unity.

As the Supreme Court weighs the legality of Trump’s tariff powers and global trade partners respond to mounting uncertainty, the president’s Greenland push underscores how central tariffs have become to his foreign policy strategy. Whether the tactic yields concessions—or further strains alliances—may soon be tested.

Mortgage Rates Drop to Three-Year Low Following Trump’s $200 Billion Bond Purchase Plan

Posted on by slightbourne@noblecapitalmarkets.com

In a dramatic market shift that caught many economists off guard, mortgage rates have tumbled to their lowest point since September 2022, following President Trump’s bold announcement that government-sponsored enterprises Fannie Mae and Freddie Mac would purchase $200 billion in mortgage bonds.

The average 30-year fixed mortgage rate dropped to 6.06% this week, down from 6.16% the previous week, according to Freddie Mac data. The 15-year rate similarly declined to 5.38% from 5.46%, marking a significant milestone for prospective homebuyers and homeowners considering refinancing.

The president’s January 8th social media post declaring he was “instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS” sent immediate ripples through financial markets. The announcement specifically targeted mortgage-backed securities, driving up demand for these bonds and subsequently pushing their yields downward—a direct pathway to lower consumer mortgage rates.

Market response was swift and substantial. The Mortgage Bankers Association reported a 16% surge in home purchase applications and a remarkable 40% jump in refinancing applications through the following Friday. These numbers suggest Americans are eager to capitalize on improved borrowing conditions after years of elevated rates that have kept many potential buyers sidelined.

“With mortgage rates much lower than a year ago and edging closer to 6 percent, MBA expects strong interest from homeowners seeking a refinance and would-be buyers stepping off the sidelines,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association.

However, industry experts are tempering expectations about a rapid housing market recovery. While lower rates provide relief, significant affordability challenges persist. Home prices remain elevated in many markets, and a substantial number of existing homeowners hold mortgages with rates far below current levels—creating what economists call the “lock-in effect” that discourages moving.

Hannah Jones, senior economic research analyst at Realtor.com, projects mortgage rates will hover in the low-6% range throughout 2026, potentially supporting “modestly improving home sales.” Yet she emphasizes that any recovery will likely be “gradual rather than rapid” given persistent affordability constraints.

The policy move represents an unconventional approach to economic stimulus, directly targeting housing market conditions through government-sponsored enterprise balance sheets. While the immediate effect on rates has been clear, longer-term implications for the housing market, federal housing finance policy, and the broader economy remain subjects of intense debate among economists and policy analysts.

For now, Americans looking to enter the housing market or refinance existing mortgages have a window of opportunity that hasn’t existed since rates began their historic climb in late 2022.

U.S. Tariff Revenue Falls Sharply in December as Trade Volumes Continue to Reset

Posted on by slightbourne@noblecapitalmarkets.com

U.S. tariff revenue declined sharply in December, offering fresh evidence that President Trump’s aggressive trade policies are reshaping global commerce and slowing the flow of goods into American ports. A new report from the U.S. Treasury released Tuesday showed that $27.89 billion in tariff revenue was collected in December, nearly $3 billion less than in November and more than 10% below the October peak.

The December figure caps off a historically lucrative year for tariff collections, with total revenue reaching $264.05 billion in 2025—an unprecedented annual haul. However, it also marks the second consecutive monthly decline after the Trump administration rolled back or adjusted key tariffs late last year. October saw the highest monthly intake at $31.35 billion, followed by $30.76 billion in November before the more pronounced drop in December.

The downturn in tariff revenue reflects broader shifts in U.S. trade flows. Commerce Department data released alongside the Treasury report showed the U.S. trade deficit narrowed to $29.4 billion in November, the lowest level since mid-2009. While the data was delayed due to last fall’s government shutdown, it underscores a clear trend: less trade activity involving the United States, driven largely by sweeping tariff measures.

Administration officials have framed the shrinking trade deficit as a major policy success. Treasury Secretary Scott Bessent recently credited President Trump’s trade agenda for the improvement, noting that the deficit has fallen back to levels not seen since the aftermath of the global financial crisis. When Trump introduced his tariff regime earlier in the year, monthly customs revenues surged dramatically, rising from just $7.25 billion in February and climbing steadily through October.

Yet the recent step-down in revenue highlights the limits of tariffs as a long-term funding source. The Congressional Budget Office has already slashed its projected tariff receipts for the coming decade by roughly $1 trillion, suggesting that trade volumes are adjusting downward faster than policymakers initially anticipated. This has implications for Trump’s broader fiscal ambitions, many of which have leaned heavily on tariff income.

The president has repeatedly suggested that tariffs could fund a wide range of priorities, from tax cuts to infrastructure to national defense. Most recently, Trump argued that tariffs could support a proposed $500 billion annual increase in the U.S. military budget—a figure that exceeds twice the total tariff revenue collected in all of 2025.

Meanwhile, uncertainty continues to loom over global trade in 2026. The White House has issued new tariff threats, including a proposed 25% levy on goods from any country doing business with Iran. At the same time, a closely watched Supreme Court decision on the legality of Trump’s broad “blanket” tariffs could arrive as early as this week.

Trade data underscores the scale of the shift already underway. Shipping analytics firm Project44 reported that U.S. imports from China fell 28% in 2025, while U.S. exports to China dropped 38%, describing the change as one of the sharpest bilateral trade contractions in recent history. While shipping volumes appear to be stabilizing, they are doing so at a markedly lower level.

As the U.S. recalibrates its trade posture, the rest of the world is moving in a different direction. The European Union recently approved a landmark free-trade agreement with Mercosur nations in Latin America, creating one of the world’s largest trade blocs and highlighting a growing divergence in global trade strategies.

U.S. Inflation Cools in December as Core Prices Rise at Slowest Pace Since 2021

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U.S. inflation showed further signs of cooling in December, offering fresh evidence that price pressures across the economy are continuing to moderate as the year comes to a close. According to the latest Consumer Price Index (CPI) report released Tuesday by the Bureau of Labor Statistics, core consumer prices rose at their slowest annual pace since March 2021, reinforcing expectations that the Federal Reserve will keep interest rates steady in the near term.

On a core basis—excluding the volatile food and energy categories—prices increased 0.2% from November and rose 2.6% compared with a year earlier. That annual reading matched November’s figure and marked the weakest pace of core inflation in nearly five years. Headline inflation, which includes all categories, rose 0.3% month over month and 2.7% year over year, in line with economists’ expectations.

While inflation remains above the Federal Reserve’s long-term 2% target, the steady downward trend over the past year has eased concerns that elevated prices could derail economic growth. Policymakers have increasingly signaled that inflation now poses less of a threat than a potential slowdown in the labor market, a view supported by recent economic data.

Economists pointed to signs that underlying inflation pressures are genuinely cooling. Stephen Brown, an economist at Capital Economics, noted that December’s softer core reading came despite some price rebounds following unusually weak data in October and November. This, he said, suggests that inflation momentum has meaningfully slowed rather than temporarily paused.

The CPI report follows last week’s December jobs data, which showed the unemployment rate pulling back from a four-year high. Together, the inflation and labor market reports have strengthened investor confidence that the Federal Reserve will leave interest rates unchanged at its January 27–28 policy meeting. Futures market data from CME Group now indicate a roughly 95% probability that rates will remain steady.

A closer look at the report revealed mixed price trends for households. Food inflation remained a notable pressure point, with food prices rising 0.7% in December, outpacing overall inflation. Five of the six major grocery store food categories posted monthly increases, including grains, dairy, fruits, and beverages. Only meat prices declined, slipping 0.2% during the month.

Offsetting some of those pressures were declines in several key core categories. Used car and truck prices fell 1.7% in December, while airline fares dropped 0.5%. Transportation services overall also declined by 0.5%, helping keep core inflation contained.

Energy prices provided additional relief. Gasoline prices plunged 5.3% in December amid falling oil prices, contributing to a 2% monthly decline in the energy index. These declines helped temper headline inflation despite higher food costs.

Nationwide chief economist Kathy Bostjancic described the report as “very encouraging,” adding that it supports expectations that lingering tariff-related pressures on goods prices will fade in 2026. As inflation continues to cool and economic growth remains resilient, markets and policymakers alike appear increasingly confident that the worst of the inflation surge is firmly in the past.

DOJ Opens Case Against Fed Chair Powell

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Federal Reserve Chair Jerome Powell revealed Sunday that the U.S. Department of Justice has issued grand jury subpoenas to the Federal Reserve, opening a case that could potentially lead to a criminal indictment against him. The development marks a dramatic escalation in tensions between the central bank and the Trump administration, with Powell characterizing the move as part of an ongoing pressure campaign over interest rate policy.

According to Powell, the subpoenas are tied to his testimony before the U.S. Senate Banking Committee in June, where he addressed scrutiny surrounding cost overruns in the Federal Reserve’s headquarters renovation project. Powell has consistently disputed claims that the renovation involved luxury features or legal violations, stating that public reports and political accusations have been inaccurate and misleading.

In a recorded statement released Sunday night, Powell suggested the DOJ’s action goes beyond a factual dispute over his testimony. Instead, he framed the case as a response to the Federal Reserve’s refusal to align interest rate decisions with political demands.

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public,” Powell said, “rather than following the preferences of the President.”

Powell emphasized that the issue at stake is whether monetary policy will continue to be guided by economic data and evidence, or whether it will be shaped by political pressure and intimidation. He defended his tenure at the Fed, noting that he has served under both Democratic and Republican administrations and has consistently followed the Fed’s congressional mandate to promote maximum employment and stable prices.

The DOJ subpoenas come after months of increasingly public conflict between Powell and President Trump. The president has repeatedly criticized the Fed for not cutting interest rates aggressively enough, despite the central bank beginning to ease policy in late 2025. After holding rates steady for much of the year, the Fed implemented three quarter-point rate cuts in September, October, and December, bringing the benchmark rate to a range of 3.5% to 3.75%.

The dispute has also centered on the Federal Reserve’s headquarters renovation in Washington, D.C. Trump has accused Powell of mismanagement and suggested the project’s cost ballooned to more than $3 billion — a figure Powell disputes. In July, Trump made a rare visit to the Fed’s headquarters, publicly clashing with Powell over the scope and cost of the renovations.

Powell testified to lawmakers that there were no luxury additions such as special elevators, rooftop gardens, or water features, countering allegations from administration officials that the project was “ostentatious” or unlawful.

President Trump told NBC News Sunday night that he was unaware of the DOJ probe. However, he reiterated criticism of Powell’s leadership, arguing that interest rates remain too high. When asked whether the investigation was intended to pressure the Fed, Trump denied the suggestion.

Market analysts warn that the case could have broader implications. Krishna Guha of Evercore ISI described the situation as an unprecedented confrontation, noting that how policymakers, investors, and Congress respond could determine whether Federal Reserve independence remains firmly protected.

The Justice Department has not publicly commented on the subpoenas. For now, Powell says he intends to continue leading the central bank as confirmed by the Senate, warning that the use of criminal investigations in monetary policy disputes could undermine institutional credibility.

“Public service sometimes requires standing firm in the face of threats,” Powell said, as the case places the Fed at the center of a historic legal and political clash.

America’s Hiring Stall: What the Weak Jobs Market Means for Investors in 2026

Posted on by slightbourne@noblecapitalmarkets.com

The final U.S. jobs report of 2025 delivered a sobering message: the labor market has slowed to a crawl. With just 50,000 jobs added in December, the year closed with the weakest pace of hiring outside of a recession in more than two decades. For investors—particularly those focused on small-cap stocks—this shift carries important implications as the economy enters 2026.

Total payroll growth for 2025 reached only 584,000 jobs, a dramatic fall from the roughly 2 million jobs added in 2024. Monthly gains averaged fewer than 50,000 positions, a level economists say is consistent with stagnation rather than expansion. While the unemployment rate dipped modestly to 4.4%, the decline was driven more by a shrinking labor force than by robust hiring.

Digging deeper, the data reveals a fragile employment landscape. Job creation was heavily concentrated in healthcare and social assistance, which together accounted for the majority of gains. Outside of those sectors, many industries experienced flat or negative hiring trends. Economists warn that future data revisions could show that overall employment actually contracted during parts of the year.

This environment has produced what many describe as a “no-hire, no-fire” economy. Companies are reluctant to lay off workers, but equally hesitant to expand payrolls amid higher borrowing costs, slower consumer demand, and lingering uncertainty around policy and global growth. For workers, this has translated into longer job searches and declining confidence. The share of unemployed individuals out of work for more than six months has risen sharply, signaling deeper structural weakness.

For investors, especially in the small-cap space, these conditions cut both ways. Slower job growth tends to pressure consumer spending, which can weigh on revenue for domestically focused companies. At the same time, a cooling labor market strengthens the case for interest rate relief later in 2026. If the Federal Reserve responds to weakening employment trends with rate cuts, smaller companies—often more sensitive to financing costs—could benefit disproportionately.

There are also early signs that the slowdown may be stabilizing. Layoff announcements declined in December, and private payroll data suggests hiring may be finding a floor. Some economists believe the worst of the labor market deceleration could already be behind us, setting the stage for a gradual recovery rather than a sharp downturn.

For small-cap investors, selectivity will be key. Businesses with strong balance sheets, pricing power, and exposure to resilient sectors may outperform if growth remains muted. Meanwhile, any meaningful improvement in hiring or labor participation could act as a catalyst for a broader re-rating across the small-cap universe.

As 2026 unfolds, the jobs market will remain a critical signal to watch. Whether this slowdown proves to be a pause—or a warning—will shape market sentiment, monetary policy, and investment opportunity in the months ahead.