NATGAS: U.S. Gas Inventories Proving Sufficient as Prices Pull Back

A few key quotes from the December minutes (link). Most of these were taken verbatim from Powell's press conference, and aren't really any more hawkish than the rate path portrayed by the December Dot Plot, so shouldn't be that surprising (and consequently haven't moved markets that much):

• The main upshot is: "participants indicated that the Committee was at or near the point at which it would be appropriate to slow the pace of policy easing. They also indicated that if the data came in about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, it would be appropriate to continue to move gradually toward a more neutral stance of policy over time."
• "Some participants" noted that "the policy rate was now significantly closer to its neutral value than when the Committee commenced policy easing in September."
• And "many participants suggested that a variety of factors underlined the need for a careful approach to monetary policy decisions over coming quarters", including recent inflation readings, sustained domestic demand, lessened downside risks to the labor market/econ activity, and increased upside risks to the inflation outlook. Again, these were flagged by Powell at the press conference.
• "A substantial majority" saw that with the policy stance "still meaningfully restrictive", "the Committee was well positioned to take time to assess the evolving outlook for economic activity and inflation, including the economy's responses to the Committee's earlier policy actions."

A new survey from the Associated Press-NORC has found that immigration is the top priority for voters in 2025, with the number of voters reporting immigration as their top issue rising significantly from 2024 and 2023.

• AP notes: "Forty-seven percent of adults cite immigration as a top issue for the government to work on in 2025, up from 35% who named immigration as their top priority issue last year. More Democrats, independents, and Republicans name immigration as their top issue compared to last year... Two years ago, just 25 percent named immigration as a top issue."
• The survey data suggests that the incoming administration of President-elect Donald Trump will have a strong mandate to push through much of the hardline border security policy outlined on the campaign trail.
• However, the data may also hint at risk for Republicans if they choose to carve the popular immigration and border security agenda into a separate reconciliation bill, leaving tax reform to be addressed in a second bill later in the year. 

Figure 1: Top Priorities for the US Government. 2023-2025

Source: AP/NORC

• Treasuries bounce slightly after the Dec FOMC minutes release - not a big reaction in rates though most officials saw upside risk to inflation gaining.
• Tsys had already scaled back midday support in the lead-up to the release, TYH5 currently -3 at 108-02.5, 10Y yield +.0164 at 4.7014%. Curves climbing steeper again: 2s10s +2.268 at 41.240, 5s30s +1.753 at 46.381.