Tag: Inflation

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Live Updates: Latest Inflation, Business and Stock Market News

Credit score…Gabby Jones for The New York Instances

The Supreme Court explained on Wednesday night that it would hold a special hearing upcoming thirty day period to evaluate the legality of two initiatives at the coronary heart of the Biden administration’s endeavours to deal with the coronavirus in the place of work.

The court explained it would go with extraordinary pace on the two actions, a vaccine-or-screening mandate aimed at large businesses and a vaccination prerequisite for certain well being treatment personnel, environment the instances for argument on Friday, Jan. 7. The justices experienced not been scheduled to return to the bench right up until the subsequent Monday.

Both equally sets of instances experienced been on what critics connect with the court’s shadow docket, in which the courtroom decides crisis applications, at times on issues of excellent consequence, without having comprehensive briefing and argument. The court’s decision to listen to arguments on the apps may perhaps have been a reaction to mounting criticism of that exercise, Adam Liptak stories for The New York Times.

The much more sweeping of the two steps, directed at enterprises with 100 or additional staff members, would affect extra than 84 million personnel and is central to the administration’s initiatives to handle the pandemic. The administration believed that the measure would result in 22 million men and women to get vaccinated and protect against 250,000 hospitalizations.

The next measure calls for wellbeing treatment workers at hospitals that receive federal dollars to be vaccinated from the virus. It “will save hundreds or even hundreds of life each thirty day period,” the administration wrote in an crisis application.

The Supreme Court docket has repeatedly upheld state vaccine mandates in a variety of options in opposition to constitutional difficulties. But the new conditions are unique, mainly because they mostly present the query of no matter if Congress has approved the government department to institute the needs.

The respond to will typically convert on the language of the relevant statutes, but there is purpose to consider that the court’s 6-justice conservative the greater part will be skeptical of wide assertions of government electrical power.

The very last time the Supreme Courtroom deemed a Biden administration application addressing the pandemic — a moratorium on evictions — the justices shut it down.

“Our program does not permit organizations to act unlawfully even in pursuit of fascinating finishes,” the court docket stated in August in an unsigned view, over the dissents of the a few liberal justices.

The vaccination-or-tests requirement for massive employers was issued in November by the Labor Department’s Occupational Safety and Well being Administration, or OSHA.

Businesses are authorized to give their employees the solution to be tested weekly alternatively of getting the vaccine, however they are not expected to spend for the tests. The rule helps make an exception for staff who do not occur into near make contact with with other folks at their positions, like all those who function at residence or completely outdoor.

Less than a 1970 law, OSHA has the authority to problem unexpected emergency policies for workplace safety, presented it can clearly show that workers are uncovered to a grave hazard and that the rule is needed.

States, firms and spiritual teams challenged the evaluate in appeals courts about the nation, and a unanimous three-decide panel of the U.S. Court of Appeals for the Fifth Circuit, in New Orleans, had ruled in favor of some of the challengers, blocking the measure.

Past 7 days, following the difficulties had been consolidated right before the U.S. Court of Appeals for the Sixth Circuit, in Cincinnati, a divided 3-choose panel reinstated the measure.

Almost quickly, more than a dozen challengers requested the Supreme Court docket to block the evaluate. Read through THE Whole Report →

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Ray Dalio warns the Fed’s hands are tied and that higher U.S. inflation is sticking around. Democracy, maybe not.

As an investor, Ray Dailo eyes the rearview mirror to see what’s ahead. If this paradox makes sense, then you likely agree with the view of history that “those who cannot remember the past are condemned to repeat it.”

Put another way, it’s hard to know where you’re going if you don’t know where you’ve been. In his latest book, “Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail,” Dalio, the founder and co-chairman of hedge fund Bridgewater Associates, shows investors their future by taking them back in time to study the rise and fall of great countries and powerful currencies. Because the question you never want to ask about either your money or your situation in life is “how did I get here?”

In almost 600 pages of narrative and charts, the book paints Dalio’s interpretation of the tectonic shifts now reshaping global politics and financial markets in ways that loudly echo the past but are yet to be determined — namely the competitive, complex relationship between the U.S. and China.

How the world’s two most-formidable nations coexist — or not — is affecting and will continue to impact not only your wealth and opportunities in the 21st century, but your children’s and their children’s as well. Says Dalio: “[Americans] have to do three things: We have to earn more than we spend by being productive and get our finances in order; we have to work well together economically and politically, and we have to avoid war with China.”

In this interview, which has been edited for clarity and length, Dalio offers insights about the similarities between the current economic and political cycle and previous ones, the disturbing external and internal threats to American democracy and influence, and how to and what to hold in your investment portfolio, including bitcoin, as history unfolds.

MarketWatch: Your new book is the latest in a series where you share your fundamental principles for investing in and living with the world as it is — essentially ways to accept and play the hand you’re dealt. What conditions and circumstances concern the United States right now that you want investors to understand, and why look to the past for answers?

Dalio: In my investing, I learned a lesson that many things that surprised me hadn’t happened in my lifetime but had happened before. The first time that happened was in August 1971 when the U.S. broke its promise to exchange dollars for gold so that it could print a lot of money, which led to the devaluation of the U.S. dollar. I was working on the floor of the New York Stock Exchange. I was surprised that the stock market rose a lot, so I looked into history and I found that same thing happened in March 1933. And I learned why.

As a result of that, I always study what drove major economic and market movements in history. My study of the Great Depression is the reason we anticipated the 2008 financial crisis.

Many people are interested in the news of the day but they’re not interested in the history and lessons of the past. But you won’t understand what’s going on if you just react to the news of the day. My approach has always been like a doctor, that if I haven’t seen many cases of it before, I want to go back and study all the cases in history so I can make decisions today. 

There are three things happening now that I needed to study:

  1. Zero interest rates with the creation of a lot of debt and a lot of money-printing to finance that debt.

  2. The internal conflict between left and right, rich and poor, Democrats and Republicans, which is producing a level of conflict in the U.S. that is the highest since 1900. This also has tax implications. There is an anti-capitalist swing under way that will affect U.S. tax policy, where people live, and how they are with each other.

  3. The rise of a great power to challenge an existing great power and the existing world order. The existing world order began in 1945 and it was the American world order. Now China is rising to challenge the United States.

These things are big. Almost every day we’re going to be talking about these three things and what’s happening with them. The last time that happened was in the 1930-1945 period. They happened many times in history basically for the same reasons in the same way. 

MarketWatch: The political and social divisions in the U.S. affect so much of what Americans take for granted, and maybe it’s because they’re taken for granted that they confront us now. Can this country move forward together?

Dalio: The fundamentals are clear. We have to do three things: We have to earn more than we spend by being productive and get our finances in order; we have to work well together economically and politically, and we have to avoid war with China. When I look at different countries, I judge them based on whether or they have good finances, internal order and external peace.  

“‘If the causes people are behind are more important to them than the system, the system is in jeopardy. I worry that’s where the U.S. is now.’”

We have the ability to do these things but I worry about us being our own worst enemy. History has shown that if the causes people are behind are more important to them than the system, the system is in jeopardy. I worry that’s where the U.S. is now. 

There is a great polarity, a fight-and-win-at-all-costs mentality. Looking ahead, in the 2022 election we will see the primary battle between the extremists and the moderates in both political parties and probably see moves to greater extremism. In the general election, there is a good chance that neither side will accept being the loser.

This type of fight-to-the-death mentality could lead to some form of “civil war.” What I mean by civil war is a series of battles not resolved by the law or the Constitution, in which power is used instead — including the failure of our democracy to work. 

Also, as I look ahead economically for the U.S. I see a worsening of the situation. Because of all the money that has been pumped out we’re now on a sugar high, but we are beginning to see that inflation will pick up, and the stimulus checks that came in won’t come in at the same rate, causing conditions to worsen. 

It all comes down to a couple of basics. To be successful we have to be financially strong and be good with each other. That’s it.  

MarketWatch: Easier said than done. There doesn’t seem to be much political will right now in Washington or among the U.S. states to work together.

Dalio: I know. In these cases — the French Revolution, the Russian Revolution, the Chinese Revolution, for example — the divides became greater and greater. And then you have to pick a side and fight for that side. We are starting to see this in the U.S. by the movement of Americans to different states. It’s not just a tax issue. It’s a values issue.

Most likely you’re going to see disagreements between the federal government and state governments on the matter of what is states’ rights that probably won’t be all settled legally, so they will be settled through tests of power. There will be places that people won’t want to be because it’ll be threatening. People will want to be with their own kind.

I want individuals to understand the mechanics of this, which is why I wrote the book. For example, I’d like them to see historical cases and fundamental cause-effect relationships to understand what it means to produce a lot of debt and a lot of money, so I wrote a chapter on the value of money.  

MarketWatch: What could this situation mean for U.S. investors? You’re describing a very different America to consider.

Dalio: Right. I want people to be well-informed and worry about what they should worry about.

I have a principle: If you worry, you don’t have to worry. And if you don’t worry, you have to worry. If you worry, you’ll take care of the thing you’re worried about. If people worry about the fighting and they worry about the finances, then they can work together and deal with these things.

“‘People think the safest investment is cash but they don’t look at the inflation-adjusted return.’”

Financially, the way it works is when the government needs to send out checks, it could either get the money from taxes or from borrowing. If it can’t get all the money it needs from borrowing, the central bank can print the money. That devalues the value of money.

Central banks can create a lot more money and debt, but that won’t raise living standards. I’d like to help people see how money and credit move through the system to drive things. I’d like to show people how money and credit are created and how person who gets the money and credit buys goods, services and financial assets, which makes those things go up in price.

I’d like to help them understand the reasons why cash is so bad in this type of environment. People think the safest investment is cash but they don’t look at the inflation-adjusted return.

Don’t hold cash. It’s better to hold a liquid, diversified portfolio of assets — if it’s balanced. Make sure you’re well-diversified outside of cash — stocks
SPX,
-0.08{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996},
bonds
TMUBMUSD10Y,
1.448{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996},
inflation-indexed bonds, commodities and gold
GLD,
-0.44{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996},
and across many countries, particularly those with stronger income statements and balance sheets. An “all-weather” portfolio has currency diversification, asset class diversification, country diversification and industry diversification.

MarketWatch: So you’re thinking that higher U.S. inflation is not transitory. It’s going to stick.

Dalio: Yes. There’s two types of inflation. There’s inflation when the demand for goods and services rises against the capacity to produce them. That’s normal, cyclical inflation. Then there’s monetary inflation — the creation of a lot of money and credit relative to the quantity of goods and services. The U.S. is having both.

When I look at the country’s financials going forward, what the size of the deficit will be and how much money is produced, that’s a concern. There’s also the risk, or even the probability, that those who are holding cash and bonds will choose to sell those to move into other things. If that happens, the U.S. central bank will have to decide if it raises interest rates, which will hurt the economy — and I don’t believe they can do that in a significant way. It would be bad for the economy, politics and the markets if they tried to rectify that by allowing interest rates to rise. So they’re probably going to have to print more money, and that causes more monetary inflation.

Today it doesn’t cost anything to borrow. Right now if you take out debt, you have practically no interest rate and principal payments can be deferred, so money is essentially free. With the cost of money negative and below the nominal growth rate, it’s very profitable to borrow and invest in anything that can grow at the inflation rate or more. That’s what’s priced into the markets now. And if they change things — raise interest rates to be higher than is priced into the markets — asset prices will go down and there will be more of an economic problem. 

“Central bankers, especially the Fed, are between a rock and a hard place. They need to tighten quite a lot to restrain inflation, yet if they do they will hurt the economy.”

Central bankers, especially the Fed, are between a rock and a hard place. They need to tighten quite a lot to restrain inflation, yet if they do they will hurt the economy. Imagine what would happen if there was a tightening of monetary policy in the classic way of first causing asset prices to go down and then the economy to contract.

Politically, imagine what that would be like. People are at each other’s throats and they’ve been given a lot of money. I’m afraid of another economic downturn. We can’t even get along on whether we can wear masks or not. You can’t allow another economic downturn. You can’t raise interest rates enough to bite. Interest rates have to be significantly below both the inflation rate and the nominal GDP growth rate.

It’s easy to see what type of policy biases will exist by looking at whether circumstances favor debtors or creditors being favored. High real interest rates will exist when circumstances make it better for the creditor to be helped and credit growth to show while low real rates will exist when central banks want to help debtors and want to stimulate credit growth. 

History shows that when countries need more money and don’t have other ways of getting it that they will produce more money. Producing money doesn’t take money away from anyone so it’s politically easier because it’s a hidden tax. Nobody’s complaining about where the money came from. If you get it through taxes, everybody squawks. History has shown that the easiest way is to print more money and give it out. If instead you tighten, it has consequences.

MarketWatch: Bitcoin and other cryptocurrency also is politicized. Crypto has become a political statement as much as a way to make and lose money.

Dalio: There’s a lot of money chasing all sorts of things, crypto among them. It has been an amazing accomplishment for bitcoin
BTCUSD,
-1.07{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
to have achieved what it has done, from writing that program, not being hacked, having it work and having it adopted the way it has been. I believe in the blockchain technology; there’s going to be that revolution, so it has earned credibility.

“I’m not an expert on bitcoin, but I think it has some merit as a small portion of a portfolio.”

I’m not an expert on bitcoin, but I think it has some merit as a small portion of a portfolio. Bitcoin is like gold, though gold is the well established blue-chip alternative to fiat money. 

However, bitcoin has a number of other issues. If it is a threat to governments, it will probably be outlawed in some places when it becomes relatively attractive. It may not be outlawed in all places. I don’t believe that central banks or major institutions will have a significant amount in it.

I have a little bit of it because I believe a portfolio should start off with, under a worst-case scenario, what assets protect it and make sure it’s diversified. It’s almost a younger generation’s alternative to gold and it has no intrinsic value, but it has imputed value and it has therefore some merit.

More: Can the Federal Reserve taper without causing a tantrum in the markets? So far, so good

Also read: Why it matters that workers feel they matter: Valued employees do a better job for employers and customers

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These 2 things are going to bring down inflation in the coming months: Biden aide

This week saw two key pieces of economic data: the lowest number of jobless claims since September 1969 and the highest inflation since June 1982.

Jared Bernstein, longtime economic aide to President Biden, was keen to drop some trivia on the more flattering number, noting “‘Honky Tonk Woman’ by the Rolling Stones was topping the charts” the last time jobless claims were this low.

What was left unmentioned was that “Ebony and Ivory” was the most popular song the last time inflation was this high. On those price challenges, Bernstein said the wheels are in motion to curb price pressures in the coming months. In fact, he said, gas prices are already down and “we fully expect [these lower prices] to show up in the December report.”

He added that “part of what is happening here is the president asking the Federal Trade Commission to make sure [oil companies] aren’t engaging in any anti-competitive behavior” as well as “the largest ever release from our strategic petroleum reserve.”

President Joe Biden speaks during his meeting with members of the White House Covid-19 Response Team on the latest developments related to the Omicron variant in the State Dining Room of the White House in Washington, DC, December 9, 2021. (Photo by Nicholas Kamm / AFP) (Photo by NICHOLAS KAMM/AFP via Getty Images)

President Joe Biden speaks Thursday during a meeting with members of the White House Covid-19 Response Team. (Nicholas Kamm / AFP via Getty Images)

AAA noted this week that gas prices have fallen in recent days to levels not seen since August. It attributed the downward pressure more to COVID-19 and fears of an economic slowdown linked to the omicron variant.

In a statement Friday, Biden also focused on energy prices, saying recent moves “should translate into lower prices for Americans in the months ahead.”

The Labor Department reported that the Consumer Price Index increased 0.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November adding up to a 6.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} increase over last year. Another measure, the so-called core CPI which excludes food and energy prices, jumped by 4.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} over last year, also marking the fastest increase in decades.

Republicans were quick to jump on the numbers with the Republican House Ways and Means leader, Rep. Kevin Brady (R., Texas), calling it ”another grim report for American workers and families whose paychecks are shrinking month after month due to President Biden’s inflation-friendly policies.”

A second factor: Supply chains

Easing supply chain logjams will help drive down prices in the coming months, and Biden is “detailing his team to do everything we can to help unsnarl supply chains,” Bernstein told Yahoo Finance. 

Bernstein is currently a member of the White House Council of Economic Advisers and has had a long relationship with Biden on economic issues. From 2009 to 2011, he served as the chief economic adviser to then-Vice President Biden during the Obama administration.

The White House’s Port Action Plan, is working and “virtually every forecast I’ve seen has some of these supply chain snarls easing as demand for goods rebalances [and] demand for services come up and that takes pressure off the supply chain and that takes some pressure off of inflation,” he said.

Kroll Institute Global Chief Economist Megan Greene told Yahoo Finance that much of the inflation was indeed caused by pent-up demand for goods, but Friday’s report “says nothing about whether we’re going to continue to buy goods once this pandemic is contained rather than services.”

‘The heart of Bidenomics’

LONG BEACH, CALIFORNIA - DECEMBER 02: A person paddle boards near shipping containers stacked on a container ship at the Port of Long Beach on December 2, 2021 in Long Beach, California. The Ports of Los Angeles and Long Beach have delayed a plan for a fourth time to charge shippers fees for container storage as a backlog of aging cargo at the ports has decreased 37 percent since last month. (Photo by Mario Tama/Getty Images)

A container ship at the Port of Long Beach waits to be unloaded last week in California. A backlog of aging cargo at the Ports of Los Angeles and Long Beach has decreased 37 percent since last month. (Mario Tama/Getty Images)

Bernstein returned repeatedly to the most recent jobless claims numbers to celebrate how, in his view, the tight job market is helping “lower-income people have a fair shot at claiming some of the economic growth.”

Wage growth, he said, is “beating inflation by a fair bit.”

“If you look at the lowest-wage workers – the bottom 25{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} – their pace is beating inflation as well,” Bernstein said.

While inflation has eaten deeply into wage gains, economists have found earnings rising the fastest recently for the lowest-paid workers, with the lowest-wage workers beating inflation.

“We have just very, very strong labor demand in this economy and particularly strong for low-wage workers,” said Bernstein. “That is at the heart of Bidenomics.”

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

US inflation jumps 6.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November — fastest rate in 39 years

Biden’s $2.2T spending bill ‘likely to boost inflation’ in the short term, economist says

It’s ‘not a quick hit’: Democrats highlight the gradual nature of their spending bills amid inflation worries

Read the latest financial and business news from Yahoo Finance

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Hottest U.S. inflation rate in almost 40 years brings sigh of relief in some corners of financial markets

The hottest U.S. consumer inflation reading in almost 40 years is bringing a surprising sigh of relief in certain corners of the financial markets, where some were expecting a headline year-over-year number closer to 7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.

The relief was evident in investors’ appetite for U.S. Treasuries Friday morning after the government’s consumer price index report, which showed the headline year-on-year reading at 6.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} for November. While undoubtedly high, the reading dodged the 7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} level that a few saw as a risk, raising hope that inflation may be in the process of topping out.

Read: Traders see next U.S. CPI reading close to 7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} as volatile markets try to shake off omicron and Federal Reserve’s hawkish pivot

While the CPI print was high, “some folks on Wall Street were expecting an even higher number” and the core CPI number, which excludes volatile items, “was in line with expectations,” said Tim Holland, chief investment officer of Orion Advisor Solutions.

“The two points above have many thinking that we are close to, if not at, peak inflation,” Holland wrote in an e-mail to MarketWatch. “That strikes us as a reasonable view, which would point us towards lower inflation going forward, which would support / justify little to no movement in yields.”

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Fixed income tends to be the asset class that gets hit hardest by rising inflation, which erodes the fixed value of bonds. Ordinarily, investors would be selling off Treasuries in response to a higher inflation print, which would lead to higher yields. Instead, ongoing demand for U.S. government debt, whether domestically or from abroad, pushed bond prices higher and yields lower Friday, as investors turn their attention to next Wednesday’s policy update from the Federal Reserve.

On Friday, yields fell across the curve, with the exception of 1-month and 2-month bill rates. The 10-year yield
TMUBMUSD10Y,
1.478{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
slipped to around 1.45{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and the 30-year
TMUBMUSD30Y,
1.872{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
dropped to 1.84{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, remaining near historically low levels.

Surprisingly, the 2-year yield, which reflects expectations for the near-term path of Fed policy, fell by the most, to around 0.64{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} which is still not far from the highest levels of the year. The move is counterintuitive because investors are expecting the Fed to proceed with a faster pace of tapering bond purchases, in order to have greater flexibility to hike interest rates sooner next year and combat inflation.

Meanwhile, equity investors brushed off the inflation print at first before all three U.S. stock benchmark indexes started giving up their earlier gains.

Gennadiy Goldberg, a senior US rates strategist for TD Securities, says the market pays less attention to the headline year-on-year figure than it does to the monthly numbers. “Yields are declining because month-over-month inflation didn’t come in as high as expected, and a lot of Fed tightening has already been priced in — with almost three rate hikes expected for 2022,” Goldberg said via phone.

“If you look at the long end and the pricing for rates in overnight-indexed swaps, the long-run terminal rate is just 1.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996},” below the 2.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} seen by Fed officials in September, he said. “That’s an indication that the market could be penciling in some policy error.”

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Stock futures edge up as investors await inflation data

Stock futures opened higher Thursday evening as investors awaited a key inflation report ahead of the Federal Reserve’s final policy-setting meeting of the year next week. 

Contracts on the S&P 500 gained. Earlier, the blue-chip index closed out the regular session in the red after three consecutive days of gains, with concerns over Omicron beginning to ease as new developments suggested the variant may not cause as severe of infections as previously feared. The Nasdaq dropped 1.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} during the regular trading day, but was still on track for a weekly return of nearly 2.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} after posting solid gains earlier this week. 

Investors on Friday are set to receive the Labor Department’s latest Consumer Price Index (CPI), which is expected to show another multi-decade high rate of inflation for November. Consensus economists are looking for the CPI to climb by 6.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November over last year, or the fastest annual rate since the 1980s. And even excluding more volatile food and energy prices, the core CPI likely rose by 4.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} over last year, or the fastest rate in about three decades.  

“We think that inflation is still going to be pretty broad when we see tomorrow’s report,” Luke Tilley, Wilmington Trust chief economist, told Yahoo Finance Live on Thursday. “But what we’re looking for is a deceleration as we go forward over the course of 2022.”

“That doesn’t mean prices are going to go down, it’s just a question of, are they going to go up as much in 2022 as in 2021 without the kind of fiscal stimulus we’ve had this year? And we don’t think that that’s going to happen, because it won’t be as much of a push on the demand side,” he added. “And then on the supply side, we’re looking for the labor market to improve, more people returning to work, and of course the delivery and the ports to improve.”  

Other recent data have further underscored the present tightness on the supply side of the economy. Weekly U.S. jobless claims plunged more than expected to reach the lowest level since 1969 last week, coming in even below pre-pandemic levels. And U.S. job openings came in at more than 11 million for only the second time on record in October.  

“Wage increases are probably on the agenda for next year. That’s part of the broadening of inflationary pressures that we’ve already started to see come through in some of that CPI data,” Seema Shah, Principal Global Investors chief strategist, told Yahoo Finance Live on Thursday. “But I have to say that we’re not so worried because we’re starting to see other parts of the inflation picture actually starting to fade. So at the end of next year, 12 months from now, we’re not expecting the kind of 6-7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} CPI numbers that we may see tomorrow. We’re thinking more the 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} level for 12 months time.” 

Given the backdrop of elevated inflation, Federal Reserve officials have adopted more hawkish rhetoric about the monetary policy path forward. Some pundits suggested more rotation could occur in U.S. equity markets beneath the surface as investors price in expectations for tighter Fed policy to rein in inflation. The Federal Open Market Committee is slated to hold its final two-day monetary policy-setting meeting of the year next week. 

“If we go back to the bulk of the second half of 2020 and for much of this year, the pendulum of risk-on, risk-off in the market was really simply occurring just below the surface of the index, of the S&P 500 —meaning that when there was a risk-on rally, it was value and it was cyclicals,” Craig Fehr, principal and leader of investment strategy for Edward Jones, told Yahoo Finance Live on Thursday. “And when it was risk-off and the risk appetite was declining, it was tech that was the safe haven.”

“What we’re seeing is a transition now, particularly as the Fed is signaling a withdrawal of some of this excess liquidity and stimulus that’s been in place for quite some time,” he added. “The market isn’t going to run directly into high-valuation, perhaps tech names broadly like it has over the past year-and-a-half. I think we’re going to see more discernment.” 

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6:25 p.m. ET Thursday: Stock futures open higher 

Here were the main moves in markets in late trading on Thursday:

  • S&P 500 futures (ES=F): +6.5 points (+0.14{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 4,673.50

  • Dow futures (YM=F): +34 points (+0.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 35,787.00

  • Nasdaq futures (NQ=F): +25.25 points (+0.16{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 16,174.00

NEW YORK, NEW YORK - DECEMBER 08: Traders work on the floor of the New York Stock Exchange (NYSE) on December 08, 2021 in New York City. Following news from the pharmaceutical company Pfizer on the effectiveness of its vaccine against the Omicron COVID-19 variant, the Dow Jones Industrial Average rallied nearly 100 points in morning trading on Wednesday. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – DECEMBER 08: Traders work on the floor of the New York Stock Exchange (NYSE) on December 08, 2021 in New York City. Following news from the pharmaceutical company Pfizer on the effectiveness of its vaccine against the Omicron COVID-19 variant, the Dow Jones Industrial Average rallied nearly 100 points in morning trading on Wednesday. (Photo by Spencer Platt/Getty Images)

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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The United States faces a default sometime between Dec. 21 and Jan. 28 if Congress does not act to raise or suspend the debt ceiling, a Washington think tank warned on Friday.

The projection from the think tank, the Bipartisan Policy Center, was a narrower window than it provided last month, and the nonpartisan group suggested that the actual deadline, or X-date, could be toward the earlier end of that range.

Democrats and Republicans appear to have tempered their tone around raising the debt limit this time around. While lawmakers have not settled on a path to lifting the borrowing cap, they are exploring a series of ways to raise it, including some that could ultimately hand more power to the White House to avoid the kind of standoffs that have routinely crippled Washington.

Republicans continue to publicly insist that Democrats must act alone to address the issue, while Democrats have countered that raising the borrowing cap is a shared responsibility given that both political parties have incurred big debts over the last several years.

“Those who believe the debt limit can safely be pushed to the back of the December legislative pileup are misinformed,” said Shai Akabas, the director of economic policy at the Bipartisan Policy Center. “Congress would be flirting with financial disaster if it leaves for the holiday recess without addressing the debt limit.”

Treasury Secretary Janet L. Yellen warned lawmakers in November that the United States could be unable to pay its bills soon after Dec. 15. During testimony before the Senate Banking Committee this week, she underscored the urgency of the matter.

“I cannot overstate how critical it is that Congress address this issue,” Ms. Yellen said. “America must pay its bills on time and in full. If we do not, we will eviscerate our current recovery.”

In September, Ms. Yellen called for the debt limit to be eliminated, explaining that it had become a destructive policy that posed unnecessary risks to the economy. After approaching the first default in American history, Congress in October raised the statutory debt limit by $480 billion, an amount the Treasury Department estimated would allow the government to continue borrowing through early December.

Congressional leaders have been quietly discussing ways to address the debt ceiling, after Republicans warned that they would not help Democrats clear the 60-vote threshold needed to break a Republican filibuster against legislation to raise the borrowing cap.

Senators Chuck Schumer of New York, the majority leader, and Mitch McConnell of Kentucky, the minority leader, have spoken repeatedly in recent weeks about the issue, but they have remained tight-lipped in public about a possible solution.

The debate has been further complicated by former President Donald J. Trump and his continued influence over the Republican Party. He has repeatedly railed at Mr. McConnell and the other Republican senators who backed a procedural vote in October that cleared the way for Democrats to raise the debt limit.

But Mr. McConnell, while pushing for Democrats to raise the borrowing cap without help from his conference, pledged this week that a default would be avoided.

Credit…Al Drago for The New York Times

“Let me assure everyone the government will not default, as it never has,” Mr. McConnell said on Tuesday. Pressed further, he added, “We’re having useful discussions about the way forward.”

Cut out of both the $1.9 trillion coronavirus relief package that passed in March and the $2.2 trillion climate, tax and spending plan that Democrats are trying to push through the Senate, Republicans have refused to help Democrats accommodate debt incurred by both parties. They have taken that position even though leaders of both parties signed off on the spending that helped the debt balloon.

Democrats, in turn, have balked at a Republican demand to use a fast-track process known as budget reconciliation to raise the debt limit without Republican votes. Democrats used the process to pass the coronavirus relief package and they are using it again for the climate, tax and spending plan, but they have argued that Republicans should help keep the government from defaulting.

Aides in both parties, while cautioning that a solution has not been agreed to, noted that party leaders had so far refrained from publicly trading blame over the issue.

As a way of navigating around the impasse, some officials have discussed the possibility of handing the authority of raising the debt limit to the administration, while granting Congress the ability to disapprove the decision with just a simple majority.

Some lawmakers, however, may be unwilling to hand that power to the White House or lose a cudgel often used by the minority party to exert pressure, particularly while 60 votes are needed to end a filibuster in the Senate.

Other officials have floated attaching legislation raising the debt limit to the sprawling annual defense policy bill, which is the last major must-pass piece of legislation that lawmakers plan to approve in December.

But it is unclear whether such a plan would be successful: Attaching a debt ceiling increase could jeopardize the Republican votes needed to counter the bloc of liberal Democrats who typically oppose the defense bill in protest of military spending. Representative Kevin McCarthy, Republican of California and the minority leader, warned on Friday that such a maneuver could tank passage of the entire package.

The Bipartisan Policy Center said that there was additional uncertainty surrounding the debt limit this year because of the pandemic and the various economic relief programs that are still ongoing.

Dec. 15 is a particularly important date because the Treasury Department is required to make a $118 billion payment to the Highway Trust Fund. If corporate tax receipts that are due that day come in weak, Treasury could face a cash crunch and the United States could be unable to meet all of its obligations, such as paying out Social Security and funding military paychecks.

The Congressional Budget Office said this week that it expected that Treasury might run out of cash by the end of December if Congress failed to act. The budget office suggested, however, that Treasury might be able to defer some Highway Trust Fund payments that were mandated in the recently passed infrastructure law, potentially staving off a default until sometime in January.

Along with its updated projection, the Bipartisan Policy Center unveiled a new proposal for dealing with the debt limit, although it is unlikely to help lawmakers this time around.

The proposal, which is being introduced by Representatives Jodey C. Arrington, Republican of Texas, and Scott Peters, Democrat of California, would establish a process giving the president authority to suspend the debt limit through the following fiscal year as long as Congress does not pass a resolution blocking the move within 30 days. The president would then have to offer a debt reduction proposal for Congress to consider separately.