SECURITY: Trump-Netanyahu Meeting At White House Underway Shortly

• -5,000 FVH6 109-01.25, sell through 109-01.5 post time bid at 1049:46ET, DV01 $218,000.
• The 5Y contract trades 109-01.25 last (-.25)

• Analysts look for a broad re-acceleration in CPI inflation in December. Some notable categories include:
  • a strong bounce in apparel (average estimate 1.5% M/M after two months averaging -0.4%) in a reversal of bias from November’s survey later than usual and capturing holiday discounts.
  • similarly, a strong bounce in travel-related components such as lodging and airfares after sizeable implied declines.
  • housing inflation deserves a special mention after BLS methodology implied zero price growth in October. Analysts look for a similar implied M/M print from Nov for the particularly heavily weighted OER category whilst rents should accelerate after what was a soft month even accounting for this carry forward imputation impact.
  • used cars stand out, with a sizeable decline eyed after solid increases averaging 0.5% M/M over the two months (specifically 0.75% M/M in Oct and 0.29% M/M in Nov, with a monthly breakdown possible because it’s a non-surveyed series).
• The median core CPI estimate looks for 0.35% M/M in Dec, revised from 0.36 in our unrounded table posted earlier today. That revision comes from now including NatWest at 0.357% M/M and correcting Deutsche Bank with 0.35% vs the 0.41% earlier.
• Analysts on balance look split between a 2.7 or 2.8% Y/Y print for core CPI, although there’s a broad range of 2.6-2.9% having slowed from 3.02% in Sept to 2.63% in Nov.
• These figures imply upside risks to Bloomberg consensus of 0.3% M/M and 2.7% Y/Y. 

Several former Fed chairs, Treasury Secretaries, and Council of Economic Advisers chairs, from Democratic and Republican administrations, have released a joint statement in support of under-fire Fed Chair Jerome Powell. Statement says that "The Federal Reserve’s independence and the public’s perception of that independence are critical for economic performance, [...]. [The Powell inquiry] is an unprecedented attempt to use prosecutorial attacks to undermine that independence. This is how monetary policy is made in emerging markets with weak institutions,[...] It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success." 

• Signatories include Alan Greenspan, Janet Yellen, Ben Bernanke, and Henry Paulson.

Speaking to CNBC, former Fed Chair Janet Yellen says that the criminal investigation into her successor is "extremely chilling". Yellen, who went on to serve as Treasury Secretary in the Biden administration, added, “I’m surprised the market isn’t more concerned. It seems to me that the market should be concerned.” 

• Yellen, when asked whether she believed Powell lied in his testimony to Congress about the renovation project at Fed HQ said, “Knowing Powell as well as I do, the odds that he would have lied are zero, so I do believe they’re going after him because they want his seat and want him gone”.
• Yellen: "You have a president that says the Fed should be cutting rates to lower rate payments on the federal debt... [I] completely [disagree] with that. It is the road to banana republic.”