Summary
United States: That’s a Wrap
- The outlook for 2025 is riddled with uncertainty, yet data released this week demonstrate a U.S. economy that retains momentum. Ascertaining what level of policy restraint achieves the careful balance of keeping inflation in check and easing stress on interest-rate sensitive sectors will dominate the monetary policy discussion come 2025.
- Next week: ISM Manufacturing & Services (Jan 3, 7), Employment (Jan 10)
International: Brazilian Real Responds to a Lack of Fiscal Credibility
- The Brazilian real sold off sharply late last week on fiscal deficit worries, and the selloff continued into this week as markets lost more confidence in Brazil’s ability to achieve its budget targets. These spending concerns drove Brazil’s currency to a new low against the U.S. dollar this week.
- Next week: Brazilian Policymakers (Mon-Fri), Mexico Inflation (Mon), Turkish Central Bank (Thu)
Interest Rate Watch: FOMC Cuts Rates, but Pace of Easing Ahead Likely Will Slow
- As widely expected, the Federal Open Market Committee (FOMC) cut the target range for the federal funds rate by 25 bps at its meeting this week. The FOMC has now cut its target range by 100 bps from its peak of 5.25%-5.50% through moves of 50 bps in September, 25 bps in November and 25 bps on Wednesday.
Credit Market Insights: Household Net Worth Climbs in Q3 on Strong Equity Markets
- Household net worth climbed $4.77 trillion in the third quarter according to data released last week from the Federal Reserve. Net worth has now risen in four consecutive quarters and in seven of the last eight, with strong performance in corporate equities and mutual fund shares doing a lot of the heavy lifting.
Topic of the Week: Will Federal Government Spending Be Slashed in 2025?
- The outlays of the federal government totaled roughly $6.8 trillion in the fiscal year that ended on September 30. With a new president and Congress taking control of Washington D.C. in January, focus has turned to whether significant spending cuts are on the horizon.
