Economic indicators

Nonfarm payrolls gained a less-than-expected 145,000 in December, and the unemployment rate held at 3.5%. Slow wage growth suggests the economy will not overheat and the Fed can maintain rates.

While Fed officials repeated their contention that monetary policy is appropriate and rates can be held if the outlook remains as expected, the situation with Iran could cause preemptive cuts, one noted economist suggests.

President Trump announced sanctions on Iran, but with no signals about other retaliation, the markets appear convinced of no further escalation of hostilities.

While the impending signing of a phase one trade deal with China should help the manufacturing sector rebound, Boeing’s decision to halt manufacturing of its 737 MAX will be a short-term negative for the ISM index.

President Trump’s New Year’s Eve announcement that he will sign a phase one trade deal with China will offer some stability to those hurt most by the trade war and should allow the Federal Reserve to keep monetary policy accommodative, according to analysts.

Home price indexes rise; consumer confidence falls

Pending home sales rose 1.2% in November while the Chicago Business Barometer increased in December.

The markets will build on 2019’s gains next year, as they withstood “trade tensions, impeachment, and geopolitical uncertainties” with the economy posting a record 11th year of expansion, according to economists.

Manufacturing activity contracted again in December, according to the Federal Reserve Bank of Richmond’s survey.

New home sales rose to 719,000 in November, from a downwardly revised 710,000 pace in October, first reported as a 733,000 pace, the Commerce Department said Monday.

Gross domestic product grew at the expected 2.1% annualized pace in the third quarter, as economists wondered how long consumers will stay strong and offset soft business investment.

The markets suggest investors won't react to the impeachment of President Trump, while a mixed bag of indicators say the economy will continue growing at a moderate pace.

Recession fears, which persisted earlier this year, have subsided and Federal Reserve Bank of Boston President Eric Rosengren does not expect a downturn unless a major shock occurs.

With markets still digesting Friday’s news, one thing is clear: the Federal Reserve will keep rates steady.

Reports of a trade deal and an election that seems to cement Brexit don’t remove the uncertainties the Federal Reserve has been worrying about.

Inflation remains tame, and although the consumer price index has ticked up, producer prices surprised to the downside Thursday.

As expected the Federal Open Market Committee left rates at a range of 1.5% to 1.75%, with no officials dissenting, and the updated forecasts call for rates to remain there through 2020.

With Federal Reserve officials offering a united front on keeping interest rates steady, attention will focus on the Summary of Economic Projections and the repo market.

As the Federal Open Market Committee convenes for its final scheduled meeting this year, one where President Trump kept upping the political pressure, the 2020 elections threaten to make the situation worse.

The strength of Friday’s employment report confirms that growth will pick up and recession is unlikely before 2023, according to at least one expert.