EM LATAM CREDIT: Brazil FinMin Sees Small Impact on Steel Exports From Tariffs

MNI's table of analyst CPI sub-category expectations for December is below (our full CPI preview is here, PDF). In general, December's report (Wednesday, 0830ET) is expected to see reversals of November's moves from a sequential perspective. Key categories:

• Rents (+ve): Both owners’ equivalent rent and primary rental inflation is seen firming on the month after a notable miss back in November. We see average estimates for OER of 0.33% (range 0.28-0.39) and primary rents at 0.29% (range 0.24-0.32). See more on this below.
• Airfares (+ve): Airfares are seen increasing circa 1.0% M/M for an acceleration from the 0.4% M/M in Nov. These are small moves compared to some of the recent swings seen in this volatile component. (Outside of CPI, the 7% NSA increase in PPI airfares will boost core PCE tracking.)
• Lodging away from home (-ve): Lodging inflation is seen slowing sharply after the far stronger than expected 3.2% in Nov, in what was its strongest monthly print since Oct 2022 and one that added 0.05pp to core CPI inflation.
• Used cars (-ve): Seen unlikely to match November’s surprisingly strong 2% increase, with estimates we’ve seen averaging 0.6% M/M (between 0-1%). The CPI series has mostly caught up with prior relative strength in Manheim auction data.
• Non-core: Energy (+ve): Energy prices seen driving the monthly acceleration in headline inflation, estimated to rise circa 2-3% owing to a push higher in gasoline prices. The recent surge in natural gas prices comes too late to impact this month’s data.
• Food (neutral): Expected to maintain its recent acceleration to a 0.4% M/M clip, with food-at-home inflation overtaking the more service-focused food-away-from category on average through Sep-Nov. As always, we also keep an eye on food-away-from-home, a component that feeds into core PCE but not CPI. 

• Stocks retreat from this morning's post-PPI data highs, extending modestly lower ahead midday with Health Care and Communication Services sectors underperforming.
• Stocks and Treasury futures enjoyed a brief knee-jerk rally after this morning's PPI inflation measures for December came out lower than expected. Risk retreated as further investigation into the data showed PCE components were on the soft side with the notable exception of airfares, which typically jump in December.
• Currently, the DJIA trades down 89.09 points (-0.21%) at 42205.84, S&P E-Minis down 20.25 points (-0.34%) at 5853.5, Nasdaq down 92.7 points (-0.5%) at 18994.25.
• Pharmaceuticals weighed on the Health Care sector in the first half: Eli Lilly -7.21% after phase 1 trials of it's weight loss drug were terminated, Charles River Labs -5.72%, Regeneron Pharmaceuticals -2.64%.
• Interactive media and entertainment shares weighed on the Communication Services sector: Meta -2.60% amid reports of staff reductions of lowest 5% performers, Paramount Global -1.21%, Netflix -1.04%.
• On the positive side, Utilities and Materials sectors outperformed in the first half. Independent power and electricity providers rebounded after Monday's selling: Vistra +4.91%, Constellation Energy +3.09%, NRG Energy +2.42%. Chemicals continued to support the Materials sector for the second day running: Celanese +5.11%, Eastman +2.09%, Air Products & Chemicals +1.65%.
• Reminder, the next round of quarterly earnings kicks off this week with Blackrock, Bank of NY Melon, Wells Fargo, JP Morgan, Goldman Sachs, Citigroup, US Bancorp, M&T Bank and PNC all reporting between January 15-16.

The Wall Street Journal reports that President-elect Donald Trump is preparing a set of energy-related executive orders, to sign upon his inauguration on January 20, that would unwind Biden administration rules on offshore/onshore drilling on federal lands, tailpipe emissions, and LNG exports approval. 

• The Journal notes: “Trump’s transition team has discussed his second-term intentions with some in the oil industry, according to industry lobbyists. The plans are fluid and could change.”
• Trump spokeswoman Karoline Leavitt said: “The American people can bank on President Trump using his executive power on day one to deliver on the promises he made to them on the campaign trail. When he takes office, President Trump will make America energy dominant again.”
• According to the Journal, one of Trump’s first moves, “will be the creation of a national energy council overseeing U.S. oil, natural gas and electric power policy,” led by Interior Secretary nominee Doug Burgum and Energy Secretary nominee Chris Wright. 
• Trump is also “widely expected to withdraw the U.S. from the Paris climate accord, as he did in his first term, potentially through an executive order in his first days in office.”
• It is unclear if Trump has sufficient executive authority to reverse all Biden-era rules, particularly the ban on offshore oil and gas exploration. During his first term, Trump tried to reverse an Obama-era rule enacted via the same 1953 law. At that time, Trump’s bid was struck down by the courts, who determined that only Congress could unwind the rule.