Senate Negotiators Fail to Reach Agreement on Border/Ukraine Aid Talks

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Washington Focus


 

The House is out until Jan. 9, while the Senate remains in session for a possible framework agreement on a border security/Ukraine aid package, but as of Sunday evening, no agreement was reached.

— Senators involved in negotiations for a border security solution are “rushing” to reach a consensus by Sunday evening, but negotiators failed to agree on border-security measures that Republicans have demanded as a condition of passing new funding for Ukraine. “We’ve got lots of issues to work through, in which there are many different ways to try and address and solve problems,” Sen. Kyrsten Sinema (I-Ariz.) told reporters Sunday evening. “We have to choose the one that works the best and that allows us to earn the votes of both houses [of Congress] and both parties,” she said.

     The lack of a framework follows Senate Majority Leader Chuck Schumer's (D-N.Y.) decision to postpone the holiday recess in the hopes of passing a bill this week Sinema mentioned that there was a "conceptual agreement on what needs to be done."

     Some progress. Sens. Chris Murphy (D-Conn.), the lead Democratic negotiator, and Sinema cited progress in the talks, which included DHS Secretary Alejandro Mayorkas.

     Sen. John Cornyn (R-Texas) on the border security negotiations, on Fox News Sunday: “I know Sen. Schumer thinks there’s going to be some deal cut behind closed doors and then jam it through the Senate and then jam the House. That's not going to happen. But we are making some progress. But this isn’t just about money. This is about policies that will actually stem the flow of mass migration across the border, along with the drugs and everything that goes with it.”

     Bottom line: Even if the Senate manages to strike a deal before the holidays, House Speaker Mike Johnson (R-La.) is telling allies he won’t bring the House back until January. Some Republicans said that the window for this year had already closed, and on Sunday a group of 15 senators asked Republican leaders to schedule a meeting of the GOP conference the week of Jan. 8, when the House is back in session, and put off a vote until after that.

— Key SAF announcement details. The update to the GREET model in March will play a pivotal role in determining the eligibility of fuels for the sustainable aviation fuel (SAF) credit. Link to Treasury release. Link/pdf to guidance released on the types of fuels allowed to receive tax credits and how the size of the credits will be calculated. Keys:

  • Corn-based ethanol and other renewable fuels likely will qualify for the SAF credit in relation to SAF produced and used in calendar years 2023 and 2024.
  • Treasury said the guidance means that “numerous fuels will qualify for the credit, including valid biomass-based diesel, advanced biofuels, cellulosic biofuel, or cellulosic diesel that have been approved by EPA under the Renewable Fuel Standard (RFS).”
  • Following the GREET model update, the focus will shift towards the Clean Fuels Credit, scheduled to take effect on Jan. 1, 2025, replacing the SAF and other credits. The structure of this credit will have significant implications for the future growth of the biofuels industry, encompassing a wide range of feedstocks.
  • The SAF credit currently incentivizes the production of SAF that achieves a lifecycle GHG emissions reduction of at least 50% compared with petroleum-based jet fuel.
  • Producers of SAF are eligible for a tax credit of $1.25 per gallon to $1.75 per gallon. Under the rules, SAF that decreases GHG emissions by 50% is eligible for the $1.25 credit, and SAF that decreases GHG emissions by more than 50% is eligible for an additional $0.01 per gallon for each percentage point the reduction exceeds 50%, up to $0.50 per gallon.
  • Fuels that have a 50% or greater GHG emissions reduction via the most recent Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) standard will continue to qualify.
     

— On Monday, Justice Sandra Day O'Connor, the first woman to serve on the United States' highest court, will be placed in repose at the Supreme Court. Justice O'Connor, who passed away at the age of 93 earlier this month, will be honored with a private ceremony at the court. Following this private ceremony, members of the public will have the opportunity to pay their respects. This practice of allowing the public to pay their respects to late justices at the Supreme Court is a tradition. Justice O'Connor's funeral is scheduled for the following day, Tuesday.

— President Joe Biden is visiting Milwaukee on Wednesday to promote his "Investing in America" plan. During his term, 14.6 million new business applications have been filed by Americans, with 178,000 in Wisconsin. Wisconsin is a crucial battleground state that could impact Biden's chances of reelection.


Economic Reports for the Week



The economic calendar has releases on housing, manufacturing, and consumer sentiment, just before the Christmas holiday weekend. The most important release will be the monthly update on core PCE, which is the Federal Reserve's preferred measure of inflation. It is expected to show a modest 0.2% month-over-month increase in November, bringing the year-over-year rate to +3.4%. This would also indicate a six-month annualized inflation rate slightly above the Fed's 2.0% target. If the core PCE number aligns with these expectations, it could fuel discussions about lower interest rates. Currently, federal funds futures trading suggests a 95% probability of the Fed's target rate being lower than the current level after the May FOMC meeting.

Monday, Dec. 18

  • U.S. Housing Market Index: Forecasters expect the housing market index to edge 2 points higher in December after falling 6 points in November to 34. This was much lower than expected and reflected high financing costs and high home prices.
     

Tuesday, Dec. 19

  • U.S. housing starts and permits: Overall building permits are scheduled to drop to 1.463 million units in November from 1.498 million units in October. Housing starts number possibly dropped to 1.360 million units in November from 1.372 million units in the month before.
  • Treasury International Capital
  • Federal Reserve: Raphael Bostic speaks
  • Japan: Bank of Japan announces rate-setting meeting decision
     

Wednesday, Dec. 20

  • MBA Mortgage Applications
  • Consumer Confidence likely showed a reading of 104.3 in December, following November's 102.0.
  • Existing Home Sales likely fell to a seasonally adjusted annual rate of 3.77 million units in November after touching 3.79 million in October.
  • The third-quarter current account deficit is expected to narrow further to $203.0 billion versus a narrower-than-expected $212.1 billion in the second quarter.
     

Thursday, Dec. 21

  • Jobless Claims: Initial claims for state unemployment benefits likely rose 16,000 to a seasonally adjusted 218,000 in the week ending Dec. 16, compared to the prior week.
  • GDP will likely remain unrevised from the second estimate at 5.2%.
  • Philadelphia Fed Manufacturing Index in December is expected improve marginally to minus 3.0 versus minus 5.9 in a November report that showed little growth in new orders and a sharp fall in shipments tied to a scarcity of backlogs.
  • Leading Indicators: Down by 0.8% in October, the index of leading economic indicators in November is expected to extend its long streak of decline, down a consensus 0.4%. This index has long been signaling a coming recession.
  • Kansas City Fed Manufacturing Index
  • Fed Balance Sheet
  • Money Supply  
     

Friday, Dec. 22

  • Durable Goods Orders likely grew 2.0% in November after falling 5.4% the month before.
  • The personal consumption expenditures (PCE) price index likely remained unchanged in November. In the 12 months through November, the PCE price index possibly advanced 2.8%. Excluding the volatile food and energy components, the PCE price index will likely have risen 0.2% in November. The so-called core PCE price index is expected to rise 3.4% year-on-year in November.
  • Personal Income & Outlays: Personal income possibly rose 0.4% in November after climbing 0.2% in October. Consumer spending is likely to increase by 0.3% in November, following a rise of 0.2% in October.
  • New Home Sales are expected to grow by 6,000 units to a seasonally adjusted annual rate of 685,000 units in November.
  • Consumer Sentiment final reading for December is expected to come in at 69.7, compared with a preliminary reading of 69.4.
     

Key USDA & international Ag & Energy Reports and Events 



Key USDA reports this week include a food price outlook update on Thursday and Friday’s Hogs & Pigs report.

On the energy front, China oil data are due in the early part of the week from Dec. 18, with the nation also due to publish commodities trade figures.

Monday, Dec. 18

     Ag reports and events:

  • Export Inspections
  • Milk Production
  • MARS monthly EU crop conditions report
  • China’s 2nd batch of November trade data, including agricultural imports
     

Energy reports and events:

  • China November output data for oil products and base metals
  • China’s second batch of November trade data, including LNG and pipeline gas imports; oil products trade breakdown
  • Angola preliminary plan for February crude exports due
  • Holidays: Kazakhstan, Qatar
     

Tuesday, Dec. 19

     Ag reports and events:

  • Food Expenditure Series
  • Fruit and Tree Nuts Data
  • Vegetables and Pulses Data
  • Dairy: World Markets and Trade
  • EU weekly grain, oilseed import and export data
     

     Energy reports and events:

  • API weekly U.S. oil inventory report
  • WTI January futures expire
  • EU energy ministers’ meeting in Brussels
     

Wednesday, Dec. 20

     Ag reports and events:

  • Broiler Hatchery
  • Coffee: World Markets and Trade
  • National Hop Report
  • China’s 3rd batch of November trade data, including country breakdowns for commodities
  • Malaysia Dec. 1-20 palm oil exports
     

     Energy reports and events:

  • EIA weekly U.S. oil inventory report
  • U.S. weekly ethanol inventories
  • Genscape weekly crude inventory report for Europe’s ARA region
  • China’s third batch of November trade data, including country breakdowns for energy and commodities
  • Holiday: Panama
     

Thursday, Dec. 21

     Ag reports and events:

  • Weekly Export Sales
  • Food Price Outlook
  • Chickens and Eggs
  • Livestock Slaughter
  • Poultry Slaughter
  • Port of Rouen data on French grain exports
     

     Energy reports and events:

  • EIA natural gas storage change
  • Brent February options expire
  • Insights Global weekly oil product inventories in Europe’s ARA region
     

Friday, Dec. 22

     Ag reports and events:

  • CFTC Commitments of Traders report
  • Peanut Prices
  • Cotton Ginnings
  • Cattle on Feed
  • Cold Storage
  • Hogs and Pigs
     

     Energy reports and events:

  • Baker Hughes weekly U.S. oil/gas rig counts

 

KEY LINKS


 

WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Russia/Ukraine war timeline | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | China outlook Omnibus spending package | Gov’t payments to farmers by program | Farmer working capital | USDA ag outlook forum | Debt-limit/budget package |

 


 

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