The week began with news that the Justice Department had served the U.S. Central Bank with grand jury subpoenas alleging fraud related to the recent renovations at the Fed’s Washington, D.C. headquarters, threatening the possibility of a criminal indictment. Fed Chair Jerome Powell issued written and video statements, commenting that the move “should be seen in the broader context of the administration’s threats and ongoing pressure,” adding “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, rather than following the preferences of the President...this is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation.” In response, current Director of the National Economic Council and potential Fed Chair nominee, Kevin Hassett, commented, “The Fed has amongst the highest interest rates on Earth right now, and President Trump is frustrated with that. But I don’t think that has anything to do with what was going on this weekend.” The subpoenas were met with immediate bipartisan pushback from lawmakers, as well as CEOs from some of the largest banks in the country. 

Last week, President Trump also proposed a one-year 10% cap on credit card interest rates beginning January 20. Big bank shares fell between 1% and 7% on the news. Industry feedback has been clear that the plan would bring unintended consequences for consumers and the American economy. A cap could make large segments of the credit card industry unprofitable – especially for consumers with subprime credit. Concerning during a time when consumer credit card debt stands at an all-time record of $1.2 trillion, according to the New York Fed. Surprisingly, the proposal was met with bipartisan support from lawmakers. Some Democrats made similar proposals in recent years and more populist GOP members advocated the proposal as beneficial to lower income constituents. 

Cox Automotive reported the average transaction price (ATP) for a new vehicle hit a new all-time high of $50,326 in December, according to estimates from Kelly Blue Book. The average MSRP also set a record of $52,627 last month, 1.2% higher than the year prior. Strong sales of full-size trucks drove the increase with more than 233,000 sold in December, the best month for the segment in five years and the sixth best in the last decade. The average price for a full-size pickup was $66,386, slightly below the record from October 2025. New electric vehicle (EV) sales rose 2.4% YoY in December but were modestly lower compared to the month prior. Incentives increased to 7.5% of ATP for gas vehicles in December, the highest point of the year, while EV incentives comprised 18% of ATP for December.

KEY INDICATORS THIS WEEK

Inflation – CPI was reported lower than consensus estimates at 0.2% MoM and 2.6% YoY for December; PPI rose 0.2% MoM and 3% YoY for November.
Commodities – Oil rose over $60/barrel for the first time in months over political tensions in Iran; gold and silver set new all-time highs this week exceeding $4,600/oz and $90/oz for the first time ever.
Next Week – November CORE PCE.