U.S. Trade Deficit Unexpectedly Falls to Lowest Level Since 2009 By Vicky Ge Huang
Good morning. U.S. jobs data for December arrives today and could provide insights into when the Federal Reserve will cut interest rates again after three consecutive reductions at the end of last year. The U.S. trade deficit fell to its lowest monthly level since 2009 in October, coming in at $29.4 billion, nearly 40% smaller than September's imbalance. Also, Treasury Secretary Scott Bessent told the Economic Club of Minnesota that President Trump could name his choice for new Fed chair later this month.
Top News U.S. Trade Deficit Unexpectedly Falls to Lowest Level Since 2009
The U.S. trade deficit fell to its lowest monthly level since 2009
in October, the Commerce Department said Thursday, a twist in volatile trade flows over the past year that economists didn't anticipate.
American imports fell to $331.4 billion in October, while exports increased to $302 billion. That yielded an October deficit of $29.4 billion, an imbalance nearly 40% smaller than September's.
Unemployment Claims Stayed Modest Last Week
Trump Calls on Fannie and Freddie to Buy $200 Billion in Mortgage Bonds
President Trump said the government-backed mortgage-finance companies Fannie Mae and Freddie Mac would buy $200 billion in mortgage bonds , part of a broader effort by the president to address a sharp rise in the cost to own a home.
"It is one of my many steps in restoring Affordability, something that the Biden Administration absolutely destroyed," Trump posted on social media. "We are bringing back the AMERICAN DREAM that was destroyed by the last Administration."
There were few details provided on how the purchases would be executed or when. The Wall Street Journal previously reported that Federal Housing Director Bill Pulte had allowed Fannie and Freddie to step up purchases of mortgage-backed securities.
Fed Chair Decision Could Occur Later This Month, Bessent Says
President Trump could announce his choice
to lead the Federal Reserve later this month, Treasury Secretary Scott Bessent said Thursday.
Bessent told the Economic Club of Minnesota that Trump hasn't yet interviewed the last of four finalists under consideration, BlackRock executive Rick Rieder. The other contenders are Kevin Hassett, the director of the White House National Economic Council; Fed governor Christopher Waller; and former Fed governor Kevin Warsh.
China Sees Consumer Inflation Edge Up as Deflation Lingers
China's consumer inflation picked up modestly
in December, while factory-gate prices remained in contraction, capping another year marked by persistent deflationary pressures amid weak domestic demand.
The consumer-price index rose 0.8% from a year earlier in December, matching market expectations, data from the National Bureau of Statistics showed Friday.
That accelerated from a 0.7% increase in November and marked a third consecutive month of gains.
South Korea's Economy Likely to Grow Faster in 2026
South Korea's government expects the economy to grow faster than previously forecast
in 2026, supported by a recovery in domestic demand.
Gross domestic product in Asia's fourth-largest economy is projected to expand 2.0% in 2026, up from the government's August forecast of 1.8%, the Ministry of Economy and Finance said Friday in its semiannual outlook.
The economy is expected to have grown 1.0% in 2025, slightly stronger than an earlier projection of 0.9%, the ministry said.
EU Approves Long-Awaited South American Trade Deal
European Union member states approved a trade deal
with South American countries that has been roughly 25 years in the making, people with knowledge of the negotiations said.
The ratification is a positive step for the EU as it grapples with strained trans-Atlantic relations under President Trump.
Officials in the European Commission-the bloc's executive arm-have been pushing to get the agreement approved this year after the deal was struck with Mercosur countries Brazil, Argentina, Paraguay and Uruguay in December 2024.
U.S. Economy U.S. Wholesale Inventories Rise at Slower Pace
U.S. wholesale inventories rose at a slower pace
in October, driven by nondurable goods.
Inventories at merchant wholesalers increased 0.2% on month, after jumping by 0.5% in September, according to Commerce Department figures published Thursday. This was in line with a consensus of economists polled by The Wall Street Journal.
Financial Regulation Regulator Finds Bank of America Shared Confidential Information Ahead of Block Trade
A yearlong investigation into Bank of America by India's financial regulator found that the bank improperly shared material nonpublic information about a $180 million block trade of stock
and then misled the authorities about it, people familiar with the matter said.
In November, the Securities and Exchange Board of India accused Bank of America of improperly sharing confidential information inside the bank about the sale of $180 million of shares in Aditya Birla Sun Life AMC, an Indian asset-management firm, in 2024, the people said.
World Liberty, Flagship in Trumps' Crypto Fleet, Seeks a U.S. Banking License
World Liberty Financial, the Trump family's flagship crypto venture, said that one of its entities has applied for a national banking license , joining the rush of crypto companies seeking broader access to mainstream finance.
World Liberty Trust filed its de novo application Wednesday with the U.S. Office of the Comptroller of the Currency. An arm of the Treasury Department, the OCC charters, regulates and supervises all national banks.
Forward Guidance Friday (all times ET)
8:30 a.m.: New Residential Construction - Housing Starts and Building Permits
8:30 a.m.: U.S. Employment Report
10 a.m.: University of Michigan Survey of Consumers - preliminary
Monday
10 a.m.: Employment Trends Index
6 p.m.: G7 finance ministers reportedly meet in Washington to discuss rare earth metals
6 p.m.: Peter McColough Series on International Economics event with Federal Reserve Bank of New York President John Williams
Research Revisions to U.S. Payrolls Should Attract Attention
U.S. payrolls revisions to prior months will also be closely scrutinized when jobs data are released at 1330 GMT, which should reveal the impact of the U.S. government shutdown, says Barclays' Julien Lafargue in a note. Barclays doubts that the data will significantly alter current expectations that the U.S. Federal Reserve will remain on pause through the first quarter. Nevertheless, the upcoming employment report "is just one piece of a puzzle that also includes inflation and an upcoming decision by the U.S. Supreme Court on reciprocal tariffs," the chief market strategist says. - Emese Bartha
Consumers Show Mixed Labor Market View in New York Fed Survey
While the Fed balances a cooling labor market and inflation that remains above its 2% target, consumers had a mixed view on where jobs were headed, according to the latest survey by the New York Fed. Unemployment expectations over the next year fell, however, people perceived a higher probability of losing their own job. The perceived probability of finding a job if people needed a new one also reached a new series low. The decline was driven by respondents with annual household incomes below $100,000 and it was most pronounced for those above age 60 and those with a high school degree or less, the survey said. - Jessica Coacci
Basis Points U.K. growth is projected to slacken in 2026, although the risks to the forecast are balanced, Morgan Stanley's Bruna Skarica says in a note. U.K. construction PMI data released this week showed weak activity in the construction industry. (Dow Jones Newswires) Eurozone retail sales rose in November , providing a boost for the economy in the final quarter of 2025 despite a consumer backdrop that remains cautious. Volumes rose 0.2% in the month compared with a revised 0.3% uptick for October, the European Union's statistics agency said Friday. This was in line with a consensus of economists polled by The Wall Street Journal. Bank of Mexico board members agreed they should assess
the inflationary impact of excise-tax and tariff increases before continuing with interest-rate cuts in 2026, minutes of their December monetary policy meeting showed. Germany's industrial output unexpectedly rose for a third straight month in November , helped by a rebound in car production, as manufacturing firms shrugged off economic worries midway through the final quarter of last year. Industrial production climbed 0.8%, after a 2.0% jump in October, Germany's statistics agency Destatis said Friday, the first time output has increased for three consecutive months since 2022. A consensus of economists polled last week by The Wall Street Journal instead expected a 0.7% decline in November. Taiwan's exports reached a record high
in 2025, powered by robust demand linked to the global artificial-intelligence boom, after the island ended the year on a strong note. Exports rose 43.4% in December from a year earlier, official data showed Friday. While that marked a slowdown from November's 56% surge, shipments remained strong. China's auto sales fell last month
as the country continued to grapple with slowing demand, a sign that business conditions could remain challenging in 2026 for the world's largest car market. Retail sales of passenger cars dropped 14% to 2.26 million units in December from a year earlier, the China Passenger Car Association said Friday. Sales rose 1.6% from November. Global food prices fell for a fourth consecutive month
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01-09-26 0754ET
