U.S. Airstrikes in Iraq Target Kataib Hezbollah After Attack on U.S. Troops

Congress on holiday break | U.S. railroad crossings at the Mexico border reopened

Washington Focus

Congress continues its holiday recess this week, but it will essentially look like most weeks lawmakers are in session: nothing will be done. The Senate returns Jan. 8 and the House Jan. 9.   

— U.S. railroad crossings at the Mexico border reopened after being closed for five days due to an influx of immigrants. The Biden administration announced that these rail crossings would remain open around the clock for several days and expressed gratitude to the Mexican government for collaborating with the Department of Homeland Security to address migration issues and combat smuggling rings.

     White House spokesperson Angelo Fernández Hernández stated, "Thanks to the round-the-clock work of DHS and our Mexican partners, CBP has reopened international railway crossings in Eagle Pass and El Paso, Texas, to include 24-hour-a-day operations for the next few days." He also mentioned ongoing engagement with industry leaders to minimize the impact of the temporary closures.

     The decision to reopen the crossings came in response to criticism from the rail industry, shipping companies and the ag sector, who argued that the closures in El Paso and Eagle Pass disrupted supply chains and hindered trade between the U.S. and Mexico.

     Ian Jefferies, the CEO of the Association of American Railroads, criticized the closures as an "ill-advised" approach that did not enhance law enforcement capacity. Union Pacific Corp. and BNSF Railway Co., both major transportation companies, move various goods through these crossings daily, including beer, grain, autos, auto parts, chemicals, and other products.

     The closure had tangible effects on families, businesses, and customers on both sides of the border, according to Union Pacific. They expressed the intention to restore normal operations as quickly as possible while addressing the backlog of shipments created during the closure.

     Customs and Border Protection (CBP) explained that they had to divert personnel from processing trains to assisting colleagues due to the migrant influx. The agency attributed the increase in attempted border crossings to "transnational criminal organizations" that mislead and exploit migrants. They had to deploy additional personnel and collaborate with Mexico to address this issue.

     While some crossings have reopened, not all have resumed normal operations. Passenger vehicles at one Eagle Pass bridge still cannot cross, and the ports of entry in Lukeville, Arizona, and the Morely Gate crossing in Nogales, Arizona, remain closed, as announced by CBP.

     The grain industry welcomed the reopening of the crossings but called for measures to prevent similar disruptions in the future. They emphasized the critical importance of trade for food security and noted that the U.S. shipped $28.5 billion worth of foodstuffs to Mexico in 2022. The National Grain and Feed Association and the North American Export Grain Association called on the U.S. and Mexican governments to continue their dialogue and implement border measures to avoid a repeat of such closures.

— U.S.: Red Sea patrol will be able to thwart Houthi attacks. The U.S. has established a new international naval coalition to serve as a "highway patrol" in the Red Sea. The coalition’s primary goal is to protect shipping in the region from attacks by Iran-backed Houthi militants. While the coalition won't provide individual escorts to vessels, it will patrol the Red Sea and the Gulf of Aden to respond to and assist commercial vessels as needed. The aim is to reassure global shipping and mariners that they can safely transit the Red Sea area, which is a crucial route for 12% to 14% of global maritime trade.

     Background. Houthi militias have been responsible for a series of attacks in the Red Sea, particularly after events involving Hamas and Israel. The Houthi group has stated its intention to continue attacking commercial shippers in the region, even after the formation of this coalition. The United States, along with Western and Arab allies, is considering military action against the Houthis, although diplomatic solutions are preferred.

     Meanwhile, a Red Sea surveillance vessel controlled by Iran's paramilitary forces is giving tracking information to Yemen's Houthi rebels, who have used it to attack commercial vessels, the Wall Street Journal reports (link). Western and regional security officials tell the paper that Iran is "providing real-time intelligence and weaponry, including drones and missiles," to the rebels — who then target ships in the Red Sea. National Security Council spokeswoman Adrienne Watson said that Iranian support has enabled Houthis to launch attacks against Israel and maritime targets, though Iran has often deferred operational decision-making authority to the Houthis.

     There are concerns about the coalition's capability to protect the numerous commercial ships in the area without pre-emptive action against the Houthis. Some military experts have doubts about the effectiveness of the U.S.-led force in this regard.

— Sen. Bill Hagerty (R-Tenn.) on the Biden administration’s Middle East approach, on Fox News Sunday: “We’ve been sending mixed messages to Israel. We talk about cease-fires. We talk about sending humanitarian aid into Gaza. We talk about putting conditions on aid. These mixed messages, and the fact that we’ve allowed Iran to enrich itself and repopulate Hamas and Hezbollah and the Houthis with the weapons that they need, have created this situation. We need to come back and snap back economic sanctions immediately on Iran. We need to send a clear diplomatic message.”

— Supreme Court delays ruling on Trump's immunity claim in election case. The Supreme Court chose not to immediately rule on Donald Trump's assertion that he is immune from federal prosecution for actions taken during his time in office. This decision comes in response to a request from Jack Smith, the special counsel responsible for charging the former president with allegedly attempting to influence the 2020 election. Instead of granting an expedited review, the Supreme Court has decided to allow lower courts to hear the case first.

     This ruling represents a favorable outcome for Trump, as it aligns with his strategy to delay legal proceedings against him. The trial was originally scheduled for March but may now face postponement due to this development.

Economic Reports for the Week

No major economic reports are on the schedule this week. Regional reports will likely be the focus.   

Monday, Dec. 25

• Holiday: Christmas Day.   
   

Tuesday, Dec. 26

• Chicago Fed National Activity Index: The national activity index is expected to slow to 0.20 in November versus minus 0.49 in October.
• Case-Shiller Home Price Index: Forecasters see the adjusted 20-city monthly rate rising 0.6% in October versus September's as-expected 0.7% increase. The annual rate is seen rising from 3.0% to 5.0%.
• FHFA House Price Index is expected to rise 0.5% in October in line with a 0.6% increase in September.
• Dallas Fed Manufacturing Survey: The activity index is expected to extend its long contraction, at a consensus minus 20.5 in December versus minus 19.9 in November.
   

Wednesday, Dec. 27

• MBA Mortgage Applications
• Richmond Fed Manufacturing Index is expected to hold steady at minus 6 in December from minus 5 in November.
   

Thursday, Dec. 28

• Jobless Claims for the Dec. 23 week are expected to come in at 210,000 versus 205,000 in the prior week.
• International Trade in Goods (Advance): The U.S. goods deficit (Census basis) is expected to hold steady at $89.6 billion in November after deepening by $2.7 billion in October to $89.6 billion.
• Retail inventories (advance)
• Wholesale Inventories (Advance) are expected to decrease 0.2% in the advance report for November that would follow a 0.4% draw in October.
• Pending Home Sales Index in November, which in October fell 1.5%, are expected to rebound 0.8%.
• Fed Balance Sheet
• Money Supply  
   

Friday, Dec. 29

• The Chicago PMI is expected to fall back in December to 50.0 versus November's much higher-than-expected 55.8, a result that ended more than a full year of contraction.
   

Key USDA & international Ag & Energy Reports and Events 

Red Sea shipping issues and Brazil’s crop and weather developments are the key commodity market topics this week.

Monday, Dec. 25

     Ag reports and events:

• Holiday: Christmas Day  
   

Tuesday, Dec. 26

     Ag reports and events:

• USDA export inspections
• Malaysia Dec 1-25 palm oil exports
• Holiday: U.K., Indonesia, New Zealand, Australia, Hong Kong
   

Wednesday, Dec. 27

     Ag reports and events:

• Broiler Hatchery
• Peanut Stocks and Processing
   

     Energy reports and events:

• API weekly U.S. oil inventory report
• Genscape weekly crude inventory report for Europe’s ARA region
• Holiday: Panama
   

Thursday, Dec. 28

     Ag reports and events:

• Livestock and Meat Domestic Data
• Port of Rouen data on French grain exports
   

     Energy reports and events:

• EIA weekly U.S. oil inventory report
• U.S. weekly ethanol inventories
• EIA natural gas storage change
• Baker Hughes weekly U.S. oil/gas rig counts
• Brent February futures expire
   

Friday, Dec. 29

     Ag reports and events:

• Weekly Export Sales
• CFTC Commitments of Traders report
• Peanut Prices
• Agricultural Prices
• Egg Products
• Holiday: Thailand
   

     Energy reports and events:

• Baker Hughes weekly U.S. oil/gas rig counts
• Nymex gasoline, ULSD January futures expires
• ICE weekly Commitments of Traders report for Brent
• Holiday: Thailand; Colombia

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