Hassett Backs Call For Fed Presidents To Have Lived In Districts

Central Bank

Summary:

National Economic Council Director Kevin Hassett backed Treasury Secretary Scott Bessent's call for a new residency requirement in the appointment of presidents of Federal Reserve banks.

"The reason we have all these regional Feds is that we want to make sure that we have a federalist system, where the different regions of the country that have different concerns" have voices at the table, Hassett, a frontrunner to become the next US central bank chief, said Friday on Fox Business.

Bessent on Wednesday said he will push for a new rule that candidates for regional Fed presidents must have lived in that district for at least three years — the latest move in a sweeping push to remake the Fed, which the Trump administration has accused of "mission creep" beyond monetary policy.

Fed presidents serve terms that are up for re-authorization every five years by the Board of Governors in Washington, with the current terms coming up in February. Asked whether a residency guideline would "derail" the approvals in February, Hassett said "that's something I've not discussed with everybody yet."

The NEC chief, whom Bloomberg reported last week is the top candidate to succeed Chair Jerome Powell when his term is up in May, was also asked wither President Donald Trump plans to veto any Fed president who hasn't lived in their district for three years. Hassett said "I've not discussed that with him."

"The unfortunate thing about the current design of the Federal Reserve is that the only folks who always get a vote on interest rates are the people who live in Washington and the people who live in New York," Hassett said. He said he and Bessent had discussed changing that, while adding, "I think it wouldn't require anybody to go in and fire anybody who's there now."

Hassett reiterated his expectation that Fed policymakers will lower interest rates at their meeting next week. "It's a good time for the Fed to cautiously reduce rates again," he said.

Hassett also said he anticipates a boom in economic growth in early 2026 as the country bounces back from a hit from the recent federal government shutdown and sees the fruits of new factories coming online. And he predicted a surge in productivity, helped by investments in artificial intelligence.

Source: Bloomberg Europe

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Adam

Economic

Investors looking for a straight answer on the health of the labor market will have to keep waiting or once again make sense of mixed signals.

That's especially true as this December morning marks another first Friday of the month without government jobs data — the best labor market gauge we have.

In the meantime, investors and everyone else have to make do with next-best approximations. And by those measures, hints of calm coexist with warning signs as the labor market grinds through DOGE cuts, restructurings, and what the largest corporations see as the dawn of the AI era.

Claims for unemployment insurance dropped to a three-year low, according a new report from the Labor Department released on Thursday, bolstering the idea that the labor market remains resilient despite a host of challenges.

But 'tis the season for statistical noise.

Initial claims are subject to big swings this time of year, noted Nancy Vanden Houten, lead economist at Oxford Economics, so observers don't need to read too much into one week's worth of numbers.

"Still, initial claims have remained in a range consistent with a relatively low pace of job losses despite recent layoff announcements," Vanden Houten wrote in a note Thursday.

Meanwhile, she said, continued claims remain at levels consistent with the weak hiring that has defined the current labor market.

Other private sources of employment data show greater trepidation.

Employers announced more than 70,000 layoffs last month, according to a report from the global outplacement firm Challenger, Gray & Christmas, released Thursday. The number of cuts was up 24% from the planned layoffs announced in November 2024, and reached the highest total for the month since 2022.

“Layoff plans fell last month, certainly a positive sign. That said, job cuts in November have risen above 70,000 only twice since 2008: in 2022 and in 2008,” Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas, said in the report.

Earlier this week, private payroll processor ADP found that the economy unexpectedly shed 32,000 private-sector positions last month, with losses concentrated among small- and medium-size businesses.

Squaring this with the lower claims may be tricky. Or it may be explainable, as our Head of News Myles Udland tweeted: White-collar employees may wait longer or never file for unemployment insurance.

"Available data sources suggest employers shed jobs in the fourth quarter amid federal layoffs and feeble private hiring," said Bill Adams, chief economist for Comerica Bank, in a note Thursday.

Regardless, there is no jobs report until after the next Fed meeting, leaving the labor market as an open-ended question. And even when we get it, it will be from a labor department still getting back to normal.

Source: finance.yahoo

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Michelle

Forex

Commodity

Economic

Gold prices rose on Friday as expectations that the Federal Reserve will cut interest rates next week gained traction, with investors awaiting U.S. inflation data that could clarify the central bank's next move.

Spot goldrose 0.7% to $4,235.59 per ounce, as of 1416 GMT, and was on track for a 0.1% weekly gain.

U.S. gold futuresfor February delivery edged 0.6% higher to $4,266.50 per ounce.

"The odds are there for a rate cut... gold is retesting and reaffirming the $4,200/oz level. Although it has been volatile, the trajectory and momentum has been positive this week," said Alex Ebkarian, COO at Allegiance Gold.

Lower interest rates generally support gold, which is a non-yielding asset.

CME's FedWatch tool now shows an 87.2% chance that the U.S. central bank will cut rates next week.

Traders are waiting for September's Personal Consumption Expenditures (PCE) data later today after it was delayed due to the government shutdown. The release is expected to show a 0.2% monthly rise and 2.9% annual growth.

This follows Wednesday's labor market data, which showed private payrolls fell in November by the sharpest margin in over 2-1/2 years.

Several Fed policymakers have adopted a dovish tone recently.

Morgan Stanley projected a 25-basis-point rate cut by the Fed at its December 9-10 meeting, in line with estimates from J.P. Morgan, Bank of America, and a majority of Reuters-polled economists.

Meanwhile, physical gold demand in India and China eased this week as buyers wait for a correction in spot prices.

Silverrose 2.2% to $58.34 an ounce, up 3.5% for the week, after touching a record $58.98 on Wednesday.

The white metal has rallied 101% this year, fueled by supply deficits and its designation on the U.S. critical minerals list.

Platinumfell 0.4% to $1,640.23 and was set for a weekly loss, while palladiumgained 1.2% to $1,465.29 and was poised to end the week higher.

Source: TradingView

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Adam

Economic

Foxconn, a key Nvidia partner in its artificial intelligence buildout, saw its revenue spike 26% year-on-year in November, as demand for servers continued to ramp up amid the AI boom.

The Taiwanese company, also known as Hon Hai, is the world’s largest contract electronics manufacturer and makes the servers that hold chips in data centers, as well as assembling Apple’s iPhone.

Foxconn on Friday reported “strong growth” year-on-year for its cloud and networking products, pointing to “momentum for AI server racks,” in its monthly revenue report. It reported revenue of NT$844.3 billion ($27 billion) for November.

A longstanding partner to many of the world’s largest tech companies including Nvidia and Apple, Foxconn has become a key player in the rollout of AI infrastructure in recent times.

It was announced in May that the company would provide infrastructure to a major AI factory in Taiwan, in collaboration with Nvidia and the Taiwanese government. Two months later Foxconn announced it was taking a stake in data center construction company TECO Electric & Machinery Co.

OpenAI said last month that it would collaborate with the Taiwanese company on design work and U.S. manufacturing readiness for next generation AI infrastructure hardware.

Foxconn’s month-on-month revenue was down around 6%, with the company pointing to its smart consumer electronics segment slightly declining.

“AI server rack shipments continue to ramp up, and ICT products are in peak season in the second half of the year,” the monthly report said in its business outlook for the fourth quarter.

The company said in November that growth in its AI server business had seen its third-quarter profits jump 17% year-on-year.

Foxconn’s share price has jumped 26% since the start of 2025, following a 76% uptick over the previous 12 months.

Source: cnbc

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Adam

Forex

In thinning December markets, the Japanese yen has finally found some support. A speech earlier this week by Bank of Japan Governor Kazuo Ueda seemed to firm up views that the Bank is ready to hike on 19 December. We’re mildly bearish on USD/JPY in 2026, but it will be a slow grind

USD: Waiting for the Seasonality to Kick In

FX markets are relatively quiet. US interest rate volatility embodied in the MOVE index has dropped back to the lows of the year. Certainly, the stability of the US Treasury market has been one of the big surprises of 2025. As we move nearer to year-end in FX, we see the commodity currencies doing pretty well – or more precisely, the commodity currencies backed by metals. That was one of our key calls for 2026, where we favoured Chile’s peso and the South African rand on the metals story. This theme should be a multi-quarter one.

For the big dollar, it remains slightly offered on the view that the Fed will cut rates next week and that the arrival of Kevin Hassett as Fed Chair will somehow make the Fed more dovish. Were Hassett confirmed, we would look at the dollar through the lens of US real interest rates – in other words, if the Fed took rates too low relative to inflation expectations. Looking at 2-year US real interest rates derived from the two-year inflation swap, real rates actually rose 25bp between September and November, largely on a 50bp decline in inflation expectations. The scenario from a Hassett pick would surely be lower real rates as inflation expectations pick up. This should deliver a weaker dollar.

For the short term, however, there seems to be a consensus view that the dollar will weaken into year-end on seasonal flows. That is our view too, and why we have year-end targets at 1.18 and 152 for EUR/USD and USD/JPY, respectively. For today, the focus will be on the delayed core PCE inflation data and the latest consumer sentiment readings. Neither looks set to be a big market mover and more attention will be given to the 1800CET World Cup draw in Washington and whether President Trump is awarded FIFA’s newly minted Peace Prize.

The longer DXY can trade under 99.00, the more likely it is a drop to the 97.80/98.00 area.

EUR: Staying Supported

We’ll probably be discussing this quite a lot over the coming weeks and months, but the cost for eurozone bond investors to FX hedge their US investments is tumbling. Using three-month forwards, the cost to hedge US risk back into the euro has now dropped to 1.82% per annum from 2.45% back in July. That is a big deal for a bond investor trying to pick up, say, an extra 150bp by investing in US markets. These US hedging costs are expected to drop further as the Fed cuts rates. And these dollar sales from the eurozone buy-side should be a key factor driving EUR/USD higher in 2026.

For today, the eurozone calendar is light. This afternoon, we have a speech from ECB Chief Economist Philip Lane. The subject is global imbalances. Expect to hear more about the international role of the euro and further strong encouragement for politicians to push through reforms, such that the euro can take advantage of the move to a multipolar world.

Back to the short term, and we have a slight bias that EUR/USD trades to 1.1700/1730 and continues to find support in the 1.1630/40 area.

In the CEE space, the Polish central bank’s news conference left open the door for further rate cuts. After the close today, we could see Fitch revising its outlook for Hungarian sovereign debt to negative from stable. That’s not good news for Hungary, but probably not bad enough news to dislodge carry trade hunters from their investments in the forint.

JPY: BoJ Finally Provides Some Support

October’s spike in USD/JPY above 150 came as a shock to many (including ourselves). And by mid-November, most had concluded there was little that could turn USD/JPY around apart from heavy official intervention at 160. Additionally, we’ve been asked several times whether the yen is losing its safe-haven status. We’ve replied that the benign risk environment means the yen has not seriously been tested on that score.

However, it now seems that the prospect of Bank of Japan hikes is finally supporting the yen. A 25bp hike is virtually priced for the 19 December meeting and the 1m JPY OIS rate, priced two years’ forward, has moved to 1.47% from 1.14% in the last month alone. The view here seems to be that the new Japanese government, despite its reflationary credentials, does not want to embrace a weak yen and will allow BoJ rate hikes. We made this point in our FX outlook – namely that a weaker yen would only add to the cost-of-living crisis that caused so many problems for the LDP in the first place.

We’ve got a modest 152 target for USD/JPY by year-end. And also a modest 148 forecast for year-end 2026.

GBP: Short Squeeze Continues

Sterling continues to do well. We doubt this represents a major reassessment of UK sovereign risk, although we note that the 10-year Gilt swap spread has held onto its modest narrowing and is now at 48bp. This stood at 58bp in late September. We prefer to see the current sterling rally as a short squeeze.

We are a little bearish on the dollar and have a year-end GBP/USD target at 1.34. But we also favour some sterling underperformance against the euro as the Bank of England restarts its easing cycle this December. That should mean EUR/GBP does not spend too much time in the low 0.87s and should be back near 0.88 or above by year-end.

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Glendon

Political

Economic

Vice President JD Vance is a master of dramatic soundbites. Rumors are swirling that the European Commission will fine X hundreds of millions of dollars for "not engaging in censorship," he tweeted on Thursday. Europe, in other words, was trying to force X's owner Elon Musk to smother the free speech of his users.

Vance was wrong on both counts. Europe's regulatory fine against Elon Musk's X has turned out to be a more modest €120 million ($140 million). It also has nothing to do with censorship. X isn't being told what content to remove. It's simply required to be transparent about verification, advertising and provide access to third-party researchers, none of which the company has done.

X's descent into a racist, politically radical hellscape fueled by porn in recent years is the predictable outcome of chronic opacity and deliberate obfuscation. X misled users by monetizing its blue checkmarks so anyone could become "verified." It blocked independent researchers from accessing public data and charged prohibitive fees for limited Application Programming Interface access, making it nearly impossible to study misinformation patterns, according to the Commission's findings. And the company declined to maintain a searchable, reliable advertising database too, obscuring who was paying what to influence public discourse.

The fine represents 6% of X's $2.3 billion in projected advertising revenue for 2025. That's perfectly manageable for the world's richest person and X has 90 days to implement changes that fix the issue or it could face additional fines, Bloomberg News reported. But the penalty could have been much bigger. The Commission had originally considered calculating a fine based on Musk's entire private company portfolio, or what the Commission called the Musk Group. That would have included SpaceX's projected income of $15.5 billion for this year, along with money from xAI, Boring Co. and X. To have abandoned a higher number after a two-year investigationsuggests the EU is pulling its punches.

The reason is almost certainly geopolitical pressure and the threat of trade retaliation. US Commerce Secretary Howard Lutnick recently told Brussels it must loosen digital laws in exchange for lower steel tariffs. The quid pro quo was explicit.

The Commission would deny it's going soft on Big Tech. After all, it's mulling a probe into Meta Platforms Inc. over WhatsApp's artificial intelligence features, and is rolling out the world's most sweeping legislation on AI.

But the latter legislation has been delayed, and the Commission has been similarly timid with antitrust fines this year against against Apple Inc. of €500 million and Meta of €200 million, which were tiny fractions of their revenue and well below the 10% permitted under the region's new antitrust legislation.

X was the European Union's first probe under its other new law addressing harmful online content, known as the Digital Services Act (DSA). The law is careful about threading the needle on free speech by pushing companies to conduct more transparent risk assessments on their recommendation algorithms, to ensure they're not promoting violence, hate speech or content about eating disorders and self-harm.

Now Europe's handling of this initial case sets the template for its enforcement against TikTok, Meta and others — and its weak response to Musk threatens to undermine the entire regulatory framework.

Critically, Musk's case shows why consolidated power in the hands of a few tech billionaires can be so perilous. He not only controls a major social platform but also critical infrastructure that could steer the war in Ukraine (Starlink), advanced artificial intelligence (xAI) and space technology (Space X), all while having served as an advisor to the US president, a tenure that was fleeting and explosive but still retains a legacy judging by Vance's latest comments.

Far from turning X into a town square for free speech, Musk has made it a vehicle for his personal political agenda while neglecting to build the necessary checks and balances to make such a platform safe and trustworthy. False, ideologically extreme posts go viral on X, poisoning public discourse and warping democratic decisions. It sets a precedent that could embolden other billionaire-owned platforms to prioritize ideology over the public interest. European regulators faced the exact scenario they've been striving to prevent, and they blinked.

Source: Bloomberg Europe

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Warren Takunda

Economic

Managing money effectively is key to financial security, although the best way to secure strong returns on your cash isn't always clear. In general, Europeans invest in fewer stocks than their American counterparts — instead choosing to save money in bank accounts.

Across the EU, habits around investment nonetheless differ widely, partially influenced by market offerings and different cultural perceptions around money.

Trade body the Association for Financial Markets in Europe (AFME) uses a 'Household Market Investment Indicator’ to measure how much of household savings are channelled into capital markets instruments.

It looks at the value of financial instruments held by Europeans as a share of national output. The instruments included in the calculation are equity shares (stocks), investment fund shares (like ETFs), bonds, life insurance reserves, and pension fund holdings. It excludes cash, deposits, and unlisted equity .

“These options (market-based instruments) generally offer higher long-term returns than traditional bank accounts, which often lose value after inflation,” a spokesperson at AFME told Euronews Business.

Denmark and Sweden lead

According to AFME’s Capital Markets Union report, household financial assets in the EU were almost equal in size to the bloc's GDP in the first half of 2025, coming to 94% of the total value.

The report comes as the EU is debating how to best structure its capital markets to allow investment to flow into critical sectors across the bloc.

Among EU countries, the ratio ranges from 16% in Romania to 194% in Denmark and Sweden. The Netherlands follows at 164%.

These three countries stand well above the rest, as Italy, in fourth place, has a ratio of 119%.

At the bottom of the ranking, savings in market instruments as a percentage of GDP is 16% in Romania. Next is Lithuania at 18% and Bulgaria at 20%.

The ratio is 122% in the UK, which is no longer an EU country. Is Europe Risk-Averse? Here Are the Countries Investing the Most_1

Countries that record high investment levels "typically combine three elements", said the AFME spokesperson. "These are well-developed pension schemes (e.g. NL, US, and the Nordics), tax benefits for investing, and simple, user-friendly investment accounts.”

The AFME highlighted Sweden’s Investment Savings Account (ISK) as a strong example of how policy can encourage citizens to invest. These accounts make it easy and tax-efficient to invest in things like stocks, ETFs, and funds, said the group.

The spokesperson noted that countries that lack these features often see lower engagement with capital markets and citizens often stick to low-yield savings accounts.

Capital markets savings per person

Rather than ratios alone, AFME figures also show the scale of investments. In the first half of 2025, household financial assets per person in the EU averaged €42,069.

Among EU members, it varies from €2,880 in Romania to €150,034 in Denmark.

Capital markets savings per person also exceed €100,000 in the Netherlands and Sweden.

Luxembourg ranks fourth at €76,937, demonstrating how far ahead the top three countries are. Is Europe Risk-Averse? Here Are the Countries Investing the Most_2

Is Europe Risk-Averse? Here Are the Countries Investing the Most_2

Nine EU countries, making up one in three in the bloc, have less than €10,000 in capital markets savings per person. Besides Romania, these countries are Bulgaria, Poland, Lithuania, Greece, Latvia, Estonia, Slovakia and Slovenia.

This figure is €75,463 in the UK, the highest among Europe’s top five economies.