#federal-reserve

#federal-reserve

By launching a legal assault on the Fed, Mr Trump is trying to shift blame for borrowing costs. Yet despite controlling the presidency, Senate and the House, Republicans have passed little beyond a large tax-cutting bill that benefits the rich. They have not legislated on housing supply, childcare, healthcare costs or wages. Indeed most of their actions are worsening affordability, notably deferring action even though millions face a sharp rise in their health insurance bills.

On a monthly basis, the Consumer Price Index was up 0.3% after seasonal adjustment in December. Year-over-year the all-items index was up 2.7%, the same as it was in November. Shelter was the main contributor to the all-items index's monthly increase, rising 0.4% from a month prior. Other major contributors included the food index, which rose 0.7% and the energy index, which jumped 0.3%.

This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions or whether instead monetary policy will be directed by political pressure or intimidation.

The markets are fixated on the escalated tensions between the White House and the Federal Reserve, with stocks kicking off the week under pressure. All three of the major stock market averages are lower this morning, including a modest decline in the Nasdaq Composite. Precious metals have taken their cue, with the spot gold price rising to its latest fresh all-time high above $4,600 per ounce amid a weaker U.S. dollar and rising Treasury yields.

U.S. equity futures fell sharply Sunday night after Federal Reserve Chair Jerome Powell confirmed that he is under investigation related to testimony he gave last June concerning the renovation of Federal Reserve buildings. The New York Times report breaking news of the investigation and Powell's subsequent disclosure rattled markets, reviving fears that years of President Donald Trump pressuring the Federal Reserve could now be realized into a direct assault on its independence.

Federal Reserve Chair Jerome Powell said the US central bank was served grand jury subpoenas on Friday from the Department of Justice that threatened criminal indictment. In a statement on Sunday night, Powell said the subpoenas focused on his June testimony about renovations at historic Fed office buildings. The Fed chair said the subpoenas were the latest move in the Trump administration's pressure campaign on the central bank to lower interest rates.

This morning, the S&P 500 is up 17 points. The SPDR S&P 500 ( SPY) is up $2.55. The Dow is up about 100 points, as the tech-heavy Nasdaq tacks on 68 points. Most of these gains are attributed to speculation that job gains could prompt the Federal Reserve to lower interest rates. That was after the December jobs report showed slight weakening, but a stable jobs market that could push the Fed to cut again.

If you're hunting for yield in 2026, emerging market bonds just became more interesting. The iShares J.P. Morgan USD Emerging Markets Bond ETF ( NYSEARCA:EMB) offers a 5.5% dividend yield as the asset class experiences a fundamental shift. The fund delivered 13% returns in 2025 but has gone quiet in early 2026, up just 0.07% year-to-date. That pause might not last.

October's government shutdown throttled the flow of data from federal agencies, making it tough to gauge the economy's health. Neither October nor December's Federal Reserve rate cuts were sure bets, since the central bankers rely on that data, too. Right now, markets think the central bankers will probably maintain current rates at their next meeting Jan. 27-28. But that's a "probably," not a "definitely."

The biggest macro factor affecting DGRO in 2026 is the Federal Reserve's rate-cutting trajectory. After holding rates elevated through much of 2025, the Fed resumed cuts in September. Lower rates typically benefit dividend growth stocks by reducing competition from Treasury yields and lowering borrowing costs for growth-oriented companies DGRO favors. Watch the Federal Reserve's statements following each Federal Open Market Committee meeting, typically held eight times per year.

Aside from the ongoing geopolitical turmoil we've seen, as well as concerns around inflation driven by quickly-changing tariff and trade policies, the direction of monetary policy coming out of the Federal Reserve could be the hot topic many will be watching very closely. Given president Trump's views on interest rates (namely, that they're way too high right now), a pressure campaign is still being waged on the Fed to drop rates, and do so quickly.