Month: January 2025

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

A mortgage lender owned by Warren Buffet’s holding company, Berkshire Hathaway, has been sued by the Consumer Financial Protection Bureau (CFPB), alleging that the business pushed people into taking unaffordable loans.

The Jan. 6 lawsuit was filed against Tennessee-based Vanderbilt Mortgage and Finance in the U.S. District Court for the Eastern District of Tennessee. The company provides loans for manufactured homes, also known as mobile homes.

“Vanderbilt’s business model ignored clear and obvious red flags that the borrowers could not afford the loans,” the agency said in a statement. “As a result, many families found themselves struggling to make payments and meet basic life necessities.

“Vanderbilt charged many borrowers additional fees and penalties when their loans became delinquent, and some eventually lost their homes.”

Vanderbilt is a subsidiary of Clayton Homes, the largest builder of manufactured homes in the United States. Clayton is, in turn, a wholly owned subsidiary of Berkshire Hathaway Inc. Most homes financed by Vanderbilt are manufactured and sold by affiliated companies owned by Clayton.

According to the agency, mobile homes are a “vital source of affordable housing,” especially for millions of low-income and older U.S. citizens. In July, the average sales price of a single-section manufactured home was $88,800, data from the U.S. Census Bureau show. In contrast, the median sales price of houses sold in the second quarter of 2024 was $414,500.

In the complaint, the CFPB alleged that Vanderbilt “manipulated lending standards” when borrowers did not have enough income.

“Vanderbilt often disregarded evidence that borrowers did not have sufficient income or assets (other than the value of their home) to pay their mortgage and cover recurring obligations and basic living expenses, like food and health care,” the statement said.

“Sometimes, Vanderbilt originated loans for borrowers who were already struggling, making their financial situation worse.”

For instance, in one incident, the company allegedly approved a loan for a household with 33 debts in collection. Just eight months after getting the mortgage, the family fell behind in payments, court documents state.

Vanderbilt also made “artificially low estimates” of borrowers’ living expenses to justify they could pay back the loans, the CFPB claimed.

In one case, the company assumed “unreasonably low” monthly living expenses for a household of five members that only left them with $57.78 in net income, the lawsuit said. Vanderbilt went on to approve the loan, and the family missed the payment after a year, going into default, it said.

Furthermore, Vanderbilt approved loans to borrowers who the company had projected “could not pay” back the debts, the CFPB said.

For example, it approved a loan for a single mother with a residual income of negative $0.50 after applying the company’s living expense estimate, the lawsuit said. She soon failed to meet her obligations, and Vanderbilt sent the loan to collections.

The CFPB accused Vanderbilt of violating the Truth in Lending Act and Regulation Z, both of which require lenders to provide loans only after making a “reasonable and good faith determination” that the consumer is able to repay the loan.

“Vanderbilt knowingly traps people in risky loans in order to close the deal on selling a manufactured home,” said CFPB director Rohit Chopra.

“The CFPB’s lawsuit seeks to not only protect homebuyers but also honest lenders helping people to finance the purchase of an affordable home.”

Vanderbilt told The Epoch Times that the CFPB lawsuit is “unfounded and untrue, and is the latest example of politically motivated, regulatory overreach.”

The company said its underwriting processes “exceed the legal requirements for assessing a borrower’s ability to repay loans,” and “goes further by taking the greater of the borrower’s actual reported expenses or an estimated living expense for the family size.”

Vanderbilt alleged that the CFPB only scrutinized a tiny portion of the loans made, which was “less than 0.8 percent, over a six-year period,” adding that many loans were not delinquent.

Despite previously endorsing Vanderbilt, the federal agency is “now demanding compliance with an unknown and unknowable new ‘standard’ not addressed in the law,” which ultimately impacts credit-worthy borrowers from owning a home, said Vanderbilt.

Under the DOGE Radar

Over the past months, the CFPB has taken action against multiple companies for allegedly engaging in practices that harm consumers or violate laws.

Last month, the agency filed a lawsuit against Rocket Homes to prevent the company from offering real estate agents and brokers who have incentives to direct home buyers toward the company.

“Rocket engaged in a kickback scheme that discouraged homebuyers from comparison shopping and getting the best deal,” Chopra said.

“At a time when homeownership feels out of reach for so many, companies should not illegally block competition in ways that drive up the cost of housing.”

In November, the CFPB determined that Bank of America was submitting false mortgage information to the government. Mortgage providers are required by law to ask applicants certain demographic questions.

It was found that the company did not ask these questions, reporting instead that applicants opted not to respond. The bank is alleged to have engaged in this practice for at least four years. The CFPB fined Bank of America $12 million.

Meanwhile, the agency has faced criticism from Elon Musk and Vivek Ramaswamy, who are set to lead the Department of Government Efficiency (DOGE) under the second Trump administration.

DOGE aims to act as an advisory board seeking to cut down government spending and reform or remove federal agencies.

In late November, Musk demanded to “delete CFPB” in an X post, saying there were “too many duplicative regulatory agencies.”

Earlier in October, Ramaswamy said that “one could effectively abolish the CFPB because it’s illegally funded by the Fed instead of Congress,” referring to the Federal Reserve.

IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing tumbled in premarket trading in New York on Wednesday after Nvidia CEO Jensen Huang stated that “very useful” quantum computers are years out. 

During a question-and-answer session during Nvidia’s analyst day event, Evercore’s Mark Lipacis asked Huang:

Thanks a lot for hosting the meeting. Really appreciate it. Jensen, you guys have made some announcements on quantum computing. Can you share with us your view on how this technology develops over time, what your strategy is? And longer term, pick the time frame, 5, 10, 15 years. What is the difference between what quantum computing will be doing versus accelerating computing platforms that you have?

Jensen replied, “If you kind of said 15 years for very useful quantum computers, that would probably be on the early side. If you said 30, it’s probably on the late side.”

Here’s the full Q&A between Lipacis and the Nvidia CEO:

Huang’s timeline for practical quantum computing appears to be 2040, sending shares of quantum computing stocks, such as Quantum Computing Inc., D-Wave Quantum Inc., and Rigetti Computing Inc., tumbling more than 14% in premarket trading, while IonQ slid about 10%.  

Quantum computing stocks erupted in late 2024 after Google-parent Alphabet announced its latest quantum-computing chip, “Willow,” as a “breakthrough.”

Did Huang pop the quantum computing stock bubble? 

Jobs, jobs, jobs…

ADP‘s employment report showed a disappointing addition of just 122k jobs in December (worse than the +140k exp) – its lowest since August…

Source: Bloomberg

Only 3 of the 23 forecasters were lower…

Source: Bloomberg

Manufacturing saw the biggest drop in jobs (the 7th monthly decline in manufacturing jobs in the last 8 months)…

…as small- and mid-sized firms cut employees (which is odd since NFIB Small Business sentiment literally exploded higher after Trump’s election).

The West was the biggest driver of job gains by region.

It seems the labor market ”downshifted” right after Trump was elected?

“The labor market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains,” said Nela Richardson Chief Economist, ADP.

“Health care stood out in the second half of the year, creating more jobs than any other sector. “

As a reminder, yesterday JOLTS had the biggest two month jump in professional/business service job openings on record and now this?

The ADP report showed wage growth cooled further.

Workers who changed jobs saw a 7.1% increase in pay, while those who stayed put saw a 4.6% gain, the slowest since mid-2021.

ADP looks even more ridiculous as initial jobless claims plunged to 201k last week – the lowest since Feb 2024…

Source: Bloomberg

Notably the unadjusted claims soared near one year highs.

Continuing claims ticked up but remain below the 1.9mm Maginot Line…

Source: Bloomberg

Are we really back in baffle ’em with bullshit macro data mode?

UK Gilt yields topped 4.80% for the first time since 2008 this morning (up 12bps on the day) having blasted higher since The Fed started on its rate-cutting cycle…

This is not (yet) a Truss-style repudiation of the UK bond market... but it’s getting there.

“While the speed and extent of the move higher in bond yields has not been anywhere near as violent as that witnessed following the Truss budget in 2022, the impact of higher rates on the economy, particularly via higher mortgage rates, is not to be underestimated,” said Matthew Ryan, head of market strategy at Ebury.

A number of factors are weighing on gilts: supply concerns, sticky inflation and uncertainty whether the new Labour government are enacting the right policies to bring the country back on track.

While the latest increases don’t yet mirror the scope of those seen two years ago when Liz Truss’s disastrous mini-budget prompted a buyers’ strike, the spreading discomfort has investors nervous and risks complicating the calculus for the government as it looks to finance its spending plans.

The inflation outlook prompted traders to pull back their expectations for the Bank of England to cut interest rates this year, and came as yields globally soar as markets weigh the impact of potential tariffs from US President-elect Donald Trump on prices.

“This isn’t a healthy move,” said Megum Muhic, a strategist at RBC.

“General concerns surrounding debt sustainability, resurgence of inflation and potentially inflationary Trump policies are all contributing to the narrative.”

But such a rout is always a possibility when you are heavily reliant on the kindness of strangers – as Bloomberg’s Simon White notes, almost a third of UK sovereign debt is owned by foreigners. 

And unlike UK entities such as pension funds, they have no obligation to own any of it.

UK yields have been outpacing US ones as foreigners own an increasing share of the gilt market – in effect, overseas investors want a greater discount to hold more UK debt.

As Bloomberg reports, Thursday’s price action is particularly concerning for traders because a slump in the pound accompanied the rise in UK rates.

Cable was also clubbed like a baby seal, back to its weakest since the April 2024 lows…

Meanwhile, UK domestic shares tumbled, with the FTSE 250 mid-cap stock index heading for its worst two-day slump since August.

“The rise in yields is a painful blow, and it looks like, rather than being given new funds to help drive growth, government departments will have to make further cuts,” said Chris Beauchamp, chief market analyst at IG Group.

“UK stocks remain cheap, and for all the wrong reasons.”

The slide in bonds Wednesday was exacerbated by positioning as long positions in gilt futures were stopped out, according to traders. The gilt market has proved more volatile than other major bond markets in recent years, with investors often citing periods of poor liquidity.

“It looks like a small ‘Truss moment’ that could be amplified if investors start to price a more dovish BOE,” said Roberto Cobo Garcia, head of G10 FX strategy at BBVA.

However, much has changed since the 2022 crisis. The liability-driven investment strategies at the heart of the crisis must now hold larger cash buffers in order to reduce the chance of another liquidity crisis after an international regulatory effort. The BOE is also developing a repo facility which will allow these funds to raise cash in the event of future turbulence.

US equity futures were already rolling over following yesterday’s momentum-driven rout, when a the latest report out of CNN (a polar opposite to the just as fake news from WaPo earlier this week, but fake nonetheless) claiming that Trump was “considering declaring a national economic emergency to provide legal justification for a large swath of universal tariffs on allies and adversaries” sent the dollar surging, all other G-20 currencies plunging, and sparked a broad selloff across risk assets. As of 8:00am ET, S&P futures were down 0.2%, bouncing from session lows of -0.4%, and reversing a gain of 0.4% earlier in the session; Nasdaq futures were hurting more, sliding 0.6% as many of the recent best performers were sold off hard, and none more so than quantum computers which were down about 20% as a group in premarket trading; the Mag7 was also largely red )Apple -0.5%, Nvidia +0.1%, Microsoft -0.09%, Alphabet -1%, Amazon -0.07%, Meta Platforms -0.9% and Tesla -1%). Europe’s Stoxx 600 Index lost 0.4% and Asian stocks slumped, with China tumbling as usual. Meanwhile, bonds extended their ongoing selloff, with the 10Y rising to 4.72% and triggering Goldman’s VaR shock threshold of a 60bps increase in 1 month. In the UK, 10-year bond yields rose to their highest since 2008 and the 30-year inflation-linked note is now yielding more than 2%, the most since the Truss crisis of 2022 as fears spread that Keir’s spending plans will spark a fiscal disaster.

In premarket trading Quantum stocks tumbled after Nvidia CEO Jensen Huang said that “very useful” quantum computers are likely decades away. Quantum Computing (QUBT) -20%, D-Wave Quantum (QBTS) -21%, Rigetti Computing (RGTI) -23%, IonQ (IONQ) -13%. Sana Biotechnology (SANA) soars 232% after the company reported positive data from a study of its treatment of type 1 diabetes. Here are some other notable premarket movers:

• AAR (AIR) rises 3% after the provider of aviation services and parts posted fiscal 2Q sales that soared past estimates.
• Flutter (FLUT) slips 2% after the gambling firm cut its guidance for US preliminary revenue 2024 due to the impact of US sports results in the fourth quarter.
• Health Catalyst (HCAT) climbs 5% as KeyBanc turned bullish, saying the stock’s valuation is deeply discounted.
• Jasper Therapeutics (JSPR) falls 41% after posting data from the Beacon study of briquilimab.
• Olo (OLO) slips 5% after Piper Sandler downgraded the restaurant software firm, flagging concern about the 2025 outlook amid executive changes and workforce cuts.
• Palo Alto Networks (PANW) declines 2% after the security software received a pair of analyst downgrades.

S&P 500 figures started spiking lower just after 6 a.m. New York time following a report from CNN that Trump is considering declaring a national economic emergency to push through his tariff plans. Europe’s Stoxx 600 Index lost 0.4% and bond yields increased.

“Higher Treasury yields are a cause for concern for equity investors, especially when combined with speculation on what Trump may do,” said Lilian Chovin, head of asset allocation at Coutts & Co. in London. “Our view is that markets can digest higher yields, provided they are driven by stronger growth rather than inflation. In the near term it will be a challenge for risk assets.”

Amundi SA, Europe’s largest asset manager, sees a “reasonable” chance that the yield on 10-year Treasuries will again test the key level of 5%, a milestone only reached a handful of times over the past two decades. Citigroup’s wealth division also said a return to 5% — while not its base case — would offer a “really appealing” level at which to add. The yield was just under 4.70% on Wednesday.

Meanwhile, equity traders are bracing for further volatility over the coming weeks. “These first trading days have been a good overview of what could happen this year,” said Mabrouk Chetouane, head of global market strategy at Natixis Investment Managers. “Inflation, tariffs, Trump, growth, monetary policy — all these concerns could bring uncertainty.” Credit supply is also continuing after corporations and banks globally have raised roughly $111 billion this year through Tuesday. Spreads of corporate bonds remain near their lowest post-financial crisis level, despite the volatility in government debt.

In Europe stocks also reversed earlier gains, and what was a 0.4% rise has reversed into a 0.4% loss for the Stoxx 600 with financial services and banks leading gains. Here are the biggest movers Wednesday:

• Novo Nordisk gains as much as 2.4% after being upgraded to buy from neutral at UBS, which said shares in the Danish drugmaker are at an “attractive entry point” following an “overdone” selloff
• LSEG rises as much as 3.2% after making it on the list BofA’s “25 stocks for 2025” and the bank is adding it to a European list of top ideas, say analysts
• Vallourec jumps as much as 7.4%, after the French tube manufacturer announced it hit a target of zero net debt one year ahead of plan and is now ready to return capital to shareholders starting in 2025
• BCP shares advance 5.3%, rising to the highest level since May 2016, after JP Morgan raised the recommendation on the Portuguese lender to overweight from neutral on positive earnings momentum and generous payout
• Heidelberg Materials rally as much as 3.4% after analysts at BofA Global Research raised their price target on the building materials company, naming it one of its “25 stocks for 2025”
• Pluxee surges as much as 14% to the highest in four months after the employee benefits and motivation solutions firm beat analyst expectations for the first quarter
• European wind power-related stocks fall on Wednesday after President-elect Donald Trump said he would seek to prevent the construction of wind farms during his second term, threatening billions of dollars in planned projects
• Shell shares decline as much as 2% after 4Q trading update shows weakness across several divisions and may cause cuts in consensus expectations, RBC says in a note
• InterContinental Hotels Group slips as much as 1.6%, to trade at the lowest in six weeks, after Morgan Stanley downgraded the stock to underweight from equalweight
• Trigano falls as much as 7.9% in Paris, the most in about seven months, after the leisure-vehicle manufacturer reported a year-on-year revenue decline

Asian stocks dropped as concerns over a delay in further Federal Reserve interest-rate cuts weighed on sentiment. Tech shares tracked their US peers lower.
The MSCI Asia Pacific Index fell as much as 0.8%, with TSMC and Tencent among the biggest drags. A drop in US big tech after Nvidia’s product presentation failed to lift near-term prospects weighed on Asian chipmakers. Samsung Electronics bucked the trend after Nvidia’s founder expressed confidence in the Korean company.

In FX, the Bloomberg Dollar Spot Index rises 0.3% while the Swedish krona sits at the bottom of the G-10 FX leader board, falling 0.4% against the greenback after CPI surprised to the downside.

In rates, treasury futures saw continued downside pressure into early US session, reaching day’s lows amid bigger selloff in core European rates and after CNN reported that Trump was seeking an emergency declaration to push through tariffs. UK gilts led losses, with 10-year yields reaching highest level since 2008. US yields are cheaper by 1bp-3bp across maturities near session highs; 10-year, higher by 2.5bp near 4.71%, outperforms UK 10-year by about 7bp as persistent inflationary pressure continues to rattle UK markets; UK 10-year yield climbed more than 10bp to 4.789%. This week’s Treasury auction cycle concludes at 1pm New York time with $22 billion 30-year bond reopening; Tuesday’s 10-year note sale tailed slightly, by 0.2bp, as it drew highest yield since 2007. Corporate new-issue calendar is empty so far and expected to remain muted for the rest of the week after 33 offerings were priced on the past two days, topping dealers’ full-week forecasts for about $50 billion. Potential issuers today include refiner HF Sinclair, which held fixed-income investor calls Tuesday. US session includes December ADP employment change, weekly jobless claims and 30-year bond reopening poised to draw highest yield since 2007.

In commodities, oil prices advance, with WTI rising 0.8% to $74.80 a barrel. Spot gold adds $6 to $2,655/oz. Bitcoin falls below $96,000.

US economic data calendar includes December ADP employment change (8:15am), jobless claims (8:30am), November wholesale inventories (10am) and consumer credit (3pm). Fed speaker slate includes Waller at 8am; FOMC releases minutes from Dec. 18 meeting at 2pm

Market Snapshot

• S&P 500 futures up 0.2% to 5,968.50
• STOXX Europe 600 up 0.2% to 515.48
• MXAP down 0.6% to 180.83
• MXAPJ down 0.6% to 568.23
• Nikkei down 0.3% to 39,981.06
• Topix down 0.6% to 2,770.00
• Hang Seng Index down 0.9% to 19,279.84
• Shanghai Composite little changed at 3,230.17
• Sensex down 0.1% to 78,107.00
• Australia S&P/ASX 200 up 0.8% to 8,349.15
• Kospi up 1.2% to 2,521.05
• German 10Y yield up 3 bps at 2.51%
• Euro down 0.2% to $1.0322
• Brent Futures up 0.8% to $77.67/bbl
• Gold spot up 0.2% to $2,654.04
• US Dollar Index up 0.29% to 108.86

Top Overnight News

• China will subsidize more consumer products and boost funding for industrial equipment upgrades to boost domestic consumption. Meantime, the PBOC set its yuan reference rate at the strongest compared to estimates since April. BBG
• Yields on China’s 10-year sovereign debt hit record lows despite Beijing’s recent stimulus announcements, suggesting growing concern the nation will fail to avoid a deflationary spiral mirroring 1990s Japan. BBG
• The Bank of Japan will likely keep raising interest rates in the coming years as inflation appears on track to sustainably hit its 2% target, said former governor Haruhiko Kuroda. RTRS
• Samsung shares rose after Nvidia CEO Jensen Huang expressed confidence in the company’s ability to resolve technical issues producing a new type of memory chip for AI systems. BBG
• Europe is pushing back against Trump. Describing Greenland as European territory, French Foreign Minister Jean-Noel Barrot warned him against threatening the EU’s sovereign borders. And the EU’s industry chief called on the bloc to defend itself against protectionist measures. BBG
• German economic data for Nov falls short of expectations, including retail sales (-0.6% M/M vs. the Street +0.5%) and factory orders (-5.4% M/M vs. the Street -0.2%). BBG
• President-elect Donald Trump is considering declaring a national economic emergency to provide legal justification for a large swath of universal tariffs on allies and adversaries, four sources familiar with the matter told CNN, as Trump seeks to reset the global balance of trade in his second term. CNN
• Oil gained as an industry report pointed to a seventh weekly draw in US stockpiles. Inventories at the key hub in Cushing also slumped — by 3.1 million barrels — the API is said to have reported. That would be the biggest drop since August 2023 if confirmed by the EIA today. BBG
• Microsoft plans job cuts across the company soon, targeting underperforming employees. Business Insider

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed following the weak handover from Wall St where tech underperformed as yields climbed after the hot ISM Services and strong JOLTS data. ASX 200 gained amid strength in mining stocks and the top-weighted financial sector, while participants digested mixed monthly inflation data in which the Weighted CPI reading topped forecasts, but the annual trimmed mean figure softened. Capital Economics suggested would provide greater confidence the RBA is on track to meet its inflation mandate if it the result is replicated in the quarterly figures due later this month. Nikkei 225 gradually nursed the majority of its opening losses and reclaimed the key 40,000 level. Hang Seng and Shanghai Comp were pressured with market participants underwhelmed by the latest press briefing in Beijing where the NDRC announced to expand the scope of home appliance trade-ins eligible for subsidies, while frictions lingered with China’s MOFCOM voicing criticism over recent US restrictions on Chinese companies.

Top Asian News

• NDRC Vice Chairman announces loan discounts for equipment upgrades and expansion of trade-in program to include more consumer goods, while the number of types of household appliances eligible for recycling subsidies to increase from 8 to 12 with a maximum subsidy of 20% of the sales price for each item. NDRC said it will allocate special funds to support the recycling and treatment of waste electrical and electronic products, as well as include microwaves, water purifiers, dish-washing machines and rice cookers in the consumer goods trade-in subsidy scope. Furthermore, it will subsidise smartphones for up to 15% of the price and will support equipment upgrades of information technology, safe production and agriculture equipment.
• Chinese Finance Ministry official said the government has allocated CNY 81bln for consumer goods trade-ins so far this year, while a PBoC official stated they will step up financial support for private and small firms in equipment upgrades with the central bank allocating CNY 100bln of loans for select small technology firms.
• China condemned the US military blacklisting of Chinese companies and called on the US to immediately address its misconduct, while it said the US is endangering the stability of the global supply chain.
• China PCA December Prelim Retail Passenger Vehicle Sales +9% M/M (prev. +7.1%); +11% Y/Y (prev. 16.5%)

European bourses initially opened with a slight negative bias, taking impetus from a mostly negative APAC session. Soon after the cash open, sentiment improved in Europe, to currently display a modestly firmer picture, with only a couple of indices residing in the red. European sectors are mixed, with no clear out/underperformer in the session thus far. Financial Services lead, followed closely by Banks. Energy is found at the foot of the pile, with losses fuelled by Shell after it trimmed its Q4 production guidance. US equity futures are modestly firmer across the board, in an attempt to recoup some of the hefty losses seen in the prior session, which were sparked by hotter-than-expected US ISM Services and JOLTS Job Openings figures.

Top European News

 

• Banca Ifis Bids for Illimity Amid Italian Consolidation Wave
• UK Prepares to Sell New Five-Year Bonds as Borrowing Costs Surge
• IPT: Indonesia EUR Benchmark; 8Y MS+170 Area, 12Y MS+195 Area
• Novo Nordisk Gains After UBS Upgrade on ‘Attractive’ Entry Point

FX

• USD is continuing the strength from Tuesday which was facilitated by the hot ISM Services PMI data and as JOLTS data topped analysts’ forecast range. DXY re-approaches 109.00 to the upside (in a current 108.55-96 range). Attention now turns to the FOMC Minutes, ADP Employment and Initial Jobless Claims data.
• EUR attempted to regain some composure overnight after its slide beneath the 1.0400 level before feeling more pressure from the continued rebound in the USD. German Retail Sales were mixed, whilst Industrial Orders were downbeat, but did have some caveats (details in the data section below). EUR/USD resides in a 1.0311-57 range with downside levels including the 6th Jan low (1.0294).
• JPY traded indecisively overnight with USD/JPY on both sides of the 158.00 level amid a quiet data calendar for Japan and the mixed risk tone. Similar price action in Europe with the current intraday parameter between 157.91-158.32, with the pair eyeing yesterday’s highs (158.42).
• GBP is subdued in tandem with G10 counterparts on the back of the stronger USD. GBP/USD resides in a current 1.2441-94 range with the next downside level the 6th Jan low (1.2410).
• Antipodeans are feeling pressure from the firmer greenback and in the absence of major newsflow this morning. AUD/USD was choppy following the latest monthly inflation data from Australia in which the Weighted CPI printed firmer than expected but the annual trimmed mean CPI softened from the previous. AUD/USD trades within 0.6213-42 and NZD/USD within 0.5613-41.
• SEK is modestly weaker after softer-than-expected consumer inflation metrics across the board. Following December’s CPIF (cooler than expected) and the Minutes from the December meeting CapEco now expects the Riksbank to cut by 25bps in January (prev. exp. March).
• PBoC set USD/CNY mid-point at 7.1887 vs exp. 7.3435 (prev. 7.1879).

Fixed Income

• USTs are contained into a front-loaded US session on account of the Federal Holiday for Carter on Thursday. As such, we get ADP, Jobless Claims, FOMC Minutes and 30yr supply in today’s session. Into those events, USTs trade within a slim 108-04 to 108-09+ band which is entirely and comfortably within Tuesday’s 108-01 to 108-20 parameters. Ahead, US ADP, Jobless Claims ahead of speak from Fed’s Waller and then the release of the FOMC Minutes. Additionally, we await a 30yr supply which follows a tepid 3yr tap on Monday and a relatively soft 10yr outing last night.
• Bunds are similarly contained but with a slightly larger 131.90-132.14 range thus far with modest but ultimately fleeting action spurred by data this morning. A particularly soft Industrial Orders release and a mixed but largely weak Retail Sales report out of Germany sparked upside in Bunds early doors, to a retest of the above overnight peak; however, the move proved fleeting given large-order caveats to the Industrial Orders series. A 2035 outing had limited impact on Bunds.
• BTPs are the relative outperformers today after lagging yesterday on the announcement of two new syndications; this morning, we have seen marketing commence for a new 10yr BTP and a new 20yr Green BTP with orders in excess of EUR 125bln and EUR 110bln respectively.
• Gilts traded off highs in a 91.29-58 range ahead of a new 2030 auction; an outing which was mixed, with the b/c printing bang on 3.0 whilst the avg. yield is relatively high and a modestly wider tail, but ultimately had little impact on Gilts.
• UK sells GBP 4.25bln 4.375% 2030 Gilt Auction: b/c 3.0x, average yield 4.490% & tail 0.5bps.
• Germany sells EUR 3.781bln vs exp. EUR 5bln 2.00% 2035 Bund Auction: b/c 2.1x, average yield 2.51% & retention 24.38%
• Orders for Italy’s new 10yr BTP bond over EUR 125bln, for 20yr Green BTP over EUR 110bln, via Reuters citing leads; spread for 10yr +7bps, for 20yr +5bps.

Commodities

• Firmer trade in the crude complex despite the stronger Dollar, and extended on the prior day’s gains with upside seen after the latest private sector inventory data showed a larger-than-expected draw in headline crude. The complex saw additional upside in the European morning after reports that Ukraine had hit a Russian oil depot which served a military airfield, according to Ukraine’s Presidential Advisor. Brent Mar is currently just off highs in a USD 77.23-77.89/bbl parameter.
• Mixed trade across precious metals with spot gold and silver firmer whilst palladium trades flat/subdued. Spot gold trades in a current USD 2,645.40-2,654.90/oz range.
• Copper is on a firmer footing despite the stronger Dollar after the red metal lacked firm direction amid the mixed risk appetite in Asia and the subdued mood in China. 3M LME copper currently resides in a USD 8,983.00-9,056.00/t range.
• Private inventory data (bbls): Crude -4.0mln (exp. -0.2mln), Distillate +3.2mln (exp. +0.6mln), Gasoline +7.3mln (exp. +1.5mln), Cushing -3.1mln.
• Qatar set February Marine Crude OSP at Oman/Dubai + USD 0.45/bbl and Land Crude OSP at Oman/Dubai + USD 0.30/bbl.
• Shell (SHEL LN) Cuts Q4 Integrated Gas Production 880-820k boepd (prev. guided 900-960k boepd), LNG Volumes 6.8-7.2Mt (prev. guided 6.9-7.5Mt); optimisation results are exp. to be significantly lower than Q3’24. Guides Q4 Upstream: Production 1.79-1.89mln boepd, Underlying Opex USD 2.2-2.8bln. Guides Q4 Chemicals and Products: Refining Utilisation 74-78%.
• India has cut November gold imports by USD 5bln in the biggest revision, via Reuters citing sources; revised to USD 9.84bln (prev. estimated 14.86bln)
• China may trim fuel imports amid the 2025 tax hike, according to Reuters sources.
• India are looking at 2 new blocks in Jammu and Kashmir for Lithium exploration, according to Govt. sources.

Geopol

• Venezuelan President Maduro said two US nationals were arrested as part of a group of seven mercenaries. It was separately reported that the Biden administration is set to roll out new sanctions against Venezuelan President Maduro’s regime this week ahead of the Venezuelan Presidential Inauguration, according to an Axios reporter.

US Event Calendar

• 07:00: Jan. MBA Mortgage Applications
• 08:15: Dec. ADP Employment Change, est. 139,000, prior 146,000
• 08:30: Dec. Continuing Claims, est. 1.86m, prior 1.84m
• 08:30: Jan. Initial Jobless Claims, est. 215,000, prior 211,000
• 10:00: Nov. Wholesale Trade Sales MoM, est. 0.2%, prior -0.1%
• 10:00: Nov. Wholesale Inventories MoM, est. -0.2%, prior -0.2%
• 14:00: Dec. FOMC Meeting Minutes
• 15:00: Nov. Consumer Credit, est. $10.5b, prior $19.2b

DB’s Jim Reid concludes the overnight wrap

Morning from Copenhagen at an interesting time to be in Denmark, with the Danes currently in the crosshairs of Mr Trump as he vowed yesterday to “tariff Denmark at a very high level” if it didn’t give up control of Greenland. Asked if he would exclude the use of military force to obtain Greenland or separately take control of the Panama Canal he said “No, I can’t assure you on either of those two. But I can say this, we need them for economic security. We need Greenland for national security reasons.” So it will be interesting to hear the views of the locals today on this fascinating story. In fact in the unlikely event anyone is reading this in Greenland please feel free to get in touch! More from a remarkable Trump press conference later.

However, for wider markets it’s all about yields at the moment with some big or landmark moves again yesterday in a period where there continue to be doubts about whether the Fed can cut rates in 2025. A reminder that the DB house view post the election two months ago was that the Fed would have to be on hold for the whole of this year. Market pricing is catching that view up. The latest repricing had a few factors behind it, but the biggest was the ISM services print for December, where the prices paid indicator surged to its highest in almost two years, at 64.4. It’s true that the prices paid might not have the same impact as a CPI report, but it’s worth noting that a similar spike last January came right before some very strong US inflation prints in Q1 2024. And in turn, that led to a big reassessment of how quickly the Fed would cut rates, hence we saw such a big market reaction yesterday.

In terms of that reaction, Fed funds futures pushed back the likely timing of the next rate cut, with the probability of another cut by the March meeting falling from 44% on Monday to 41% by the close. And looking further out, the total amount of cuts priced by December’s meeting came down -1.6bps on the day to 37.5bps. But the bigger sell off came at the long end, with the 10yr Treasury yield (+5.5bps) closing at its highest since April, at 4.69%. In fact, yesterday’s Treasury auction saw the highest issue yield for a 10yr auction since 2007, at 4.68%. With the fresh steepening of the yield curve, the 2s10s curve moved up another +3.8bps to 39.0bps, which is the steepest it’s been since May 2022. And at the very long end, 30yr US yields (4.91%) have only been above 5% for six trading days in October 2023 since 2007 so we are in rarified air.

To be fair, it wasn’t just the prices paid indicator that led to that market reaction. For instance, the headline ISM services index was also stronger than expected at 54.1 (vs. 53.5 expected). On top of that, the JOLTS report for November showed job openings were up to a 6-month high of 8.098m (vs. 7.74m expected), so that helped to alleviate fears that labour demand was weakening. And in the background, oil prices were continuing to move higher, with Brent Crude closing at $77.05/bbl, which is the highest it’s been since October. So there were quite a few headlines that collectively pointed in a more hawkish direction.

The effects of that bond selloff were felt globally, and European yields also saw a significant rise in response to the US data. That included 10yr bunds (+3.4bps) which were up to 2.48%, and remaining on track for a 6th consecutive weekly rise. On the fiscal topic, this morning our economists published a blog (here) discussing the challenge Europe faces this year in plotting a course between ensuring fiscal stability and investing enough in growth and security.

In the meantime, gilts experienced some of the biggest losses, with 10yr gilt yields (+7.3bps) rising to their highest since October 2023, at 4.68%. And significantly, the 30yr gilt yield (+6.8bps) was up to 5.25%, which is its highest level since 1998. The problem for the UK government is that with yields where they currently are, they are close to breaching their own fiscal rules and as such may require additional tax rises.

The moves in European yields were mostly driven by the US data, as the European releases yesterday were much less eventful. Admittedly, we did get the Euro Area flash CPI print for December, but both headline and core CPI were in line with expectations, at 2.4% and 2.7% respectively. So there was little reaction in markets given they were in line with expectations, and the ECB is still widely expected to cut by another 25bps at their next meeting in just over three weeks’ time. However, one piece of news came from the German number, which was corrected to show a 2.8% inflation print on the EU-harmonised measure, not the 2.9% number that was reported the previous day. Imagine the potential market pandamonium if US CPI got corrected the day after a higher than expected print.

With bonds struggling across the board, equities also took a hit amid higher rates as well as a negative turn in tech sentiment. That saw the S&P 500 give up its opening gain to close -1.11% lower, its worst day since the rout that followed the hawkish Fed rate cut in December. The decline was led by steep losses for the Magnificent 7 (-2.53%), which came as Nvidia (-6.22%) was the second-worst performer in the S&P 500 following the announcement of new chips the previous evening. The product launch was impressive but left the market seemingly wanting more. Tesla (-4.06%) and Palantir (-7.81%), two of the tech companies that have gained since Trump’s election, were also among the five worst performers in the S&P 500. Outside of tech, the losses were more moderate, with the equal-weighted S&P down -0.33%. And over in Europe, there was a stronger performance, with the STOXX 600 up +0.32%.

Turning back to Trump’s press conference, his other headline-grabbing comments included demanding NATO countries spend 5% of GDP on defence, suggesting that the US could use “economic force” to absorb Canada and saying that he plans to rename the Gulf of Mexico to the Gulf of America. So plenty of US foreign policy uncertainty for investors to digest, especially on trade as the theme of tariffs again made a repeated appearance. On the economy front, Trump said that the outgoing administration had left a situation where “inflation is continuing to rage and interest rates are far too high”.

Asian equity markets are mostly trading lower this morning with Chinese stocks leading losses with the Hang Seng (-1.59%) trading notably lower while the CSI (-1.49%) and the Shanghai Composite (-1.46%) are extending their previous session losses after the US blacklisted major Chinese tech firms allegedly aiding Beijing’s military. Elsewhere, the Nikkei (-0.24%) is also seeing minor losses after clocking strong gains in the previous session. Elsewhere, the KOSPI (+1.11%) is outperforming as Samsung Electronics, the index heavyweight, has climbed over 3% as NVIDIA provided a vote of confidence in its ability to deliver through its current technical problems. This has offset disappointing results overnight.

Additionally, the S&P/ASX 200 (+0.93%) is also edging higher as trimmed mean inflation rate continues to fall, renewing hopes for a rate cut by the RBA. S&P 500 and NASDAQ futures are rebounding a bit, up +0.21% and +0.22% respectively.

Coming back to Australia, trimmed mean inflation for November came in at +3.2%, down from +3.5% in October. While this is still above the RBA’s inflation target of 2 to 3%, it is moving towards the range the central bank needs to cut rates and is softer than their quarterly projections from December. However, headline inflation rose from +2.1% to +2.3%. Meanwhile, yields on the policy sensitive 3yr government bonds fell -1.7bps to settle at 3.93%.

To the day ahead now, and data releases from the US include the ADP’s report of private payrolls for December, along with the weekly initial jobless claims. Meanwhile in Germany, we’ll get factory orders and retail sales for November. From central banks, we’ll get the minutes from the FOMC’s December meeting, and also hear from the Fed’s Waller and the ECB’s Villeroy.

Nearly two weeks after the Biden administration quietly finalized new climate rules targeting natural gas-powered water heaters—following years of far-left politicians and shady “green” nonprofits waging war against NatGas stoves under the guise of improving “indoor air quality”—President-elect Donald Trump has reportedly had enough of these games. He plans to issue an executive order to protect NatGas-powered appliances.

Reuters cites two sources familiar with Trump’s executive order protecting NatGas-powered appliances, including water heaters, furnaces, ovens, cooktops, and dryers, from federal and state regulators who have been on a green crusade to eliminate them from new home construction, businesses, and/or new multi-family buildings. 

Details of the executive order are still under discussion but are likely to mirror Congressional efforts to limit federal dollars for state and local initiatives that restrict gas-powered appliances or impose regulations that would increase their cost, the sources said.-RTRS

“It speaks volumes when an order from the White House is needed to stop our own government from banning natural gas furnaces and water heaters,” Karen Harbert, president of the American Gas Association, an industry trade group, wrote in a statement to Reuters. 

Harbert said, “Despite the illegal efforts to ban access and use of natural gas, our industry is hard at work to keep life essential energy affordable and reliable, especially during the extreme cold we are experiencing right now.”

One day after Christmas, the Biden administration finalized new climate rules targeting NatGas water heaters. These new rules aim to reduce carbon dioxide emissions, aligned with broader climate change mitigation efforts. 

While the war on NatGas-powered appliances appears to be part of a sinister de-growth climate change agenda, Kit Knightly, via Off-Guardian, recently explained there’s a lot more to the story; in fact, he said the move is by an overreaching government to regulate indoor air quality that will eventually mean more mandatory “smart” technology devices will be put in homes for monitoring. 

The World Economic Forum recently published a note titled “Indoor air pollution: What causes it and how to tackle it,” which claims:

indoor air pollutants can now be detected with more precise, efficient, and compact sensors thanks to advances in environmental sensing technology. As a result, intelligent home systems may soon use sensors like these to keep track of indoor air quality and notify the ventilation system before dangerous levels are reached.

Become ungovernable with a NatGas-powered stove, water heater, and cooktop.

Trump has four more years.

Via RealInvestmentAdvice.com,

Outflows from bond ETFs, such as TLT, have been tremendous over the last two months.

ETFs, unlike mutual funds, allow dealers to redeem shares for the underlying securities and vice versa.

The exchanges most often occur when the demand to buy or sell the ETF is high, thus creating a small arbitrage for the dealer.

Investors frequently associate strong inflows with higher ETF prices and outflows with weaker performance.

While at times that is certainly true, other times, it’s a false indicator.

For instance, as the graph of TLT below shows, fund inflows were at record-high levels in 2022 as TLT sold off precipitously.

Bonds are out of favor, and as shown below, TLT, the 20-year U.S. Treasury bond ETF, has seen record outflows.

There are numerous ways to interpret the graph.

Our take is that much of the recent decline is tax-related. With stocks gaining 40+% over the last two years, TLT is one of the few investor holdings that experienced a loss over the period.

Therefore, investors looking to offset tax gains with losses were likely to sell TLT. Some TLT investors were probably selling TLT but buying Treasury bonds to maintain their bond exposure.

Thus, selling the ETF and buying bonds created an arbitrage for dealers. That partially explains the large outflows from the ETF.

However, some were undoubtedly due to selling pressure in bonds and bond ETFs like TLT.

For those interpreting the outflows as bearish, we offer up advice from legendary investor Sir John Templeton:

“The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”

It has not even been two days since the Washington Post published its attempt to manipulate the dollar lower by claiming, falsely, that Trump intends to water down his sanctions, when moments ago the dollar soared on what is most likely another piece of fake news – and also just as likely another attempt by hedge fund “sources” to manipulate the FX market – when CNN reported that Trump “is considering declaring a national economic emergency to provide legal justification for a large swath of universal tariffs on allies and adversaries.” And unlike the WaPo’s “three” so-called sources, in the quest for anonymous BS supremacy CNN went to cite a whopping “four sources familiar with the matter.”

According to the report, which is likely just as “real” as the WaPo’s fake news, the emergency declaration will allow Trump – who is pursuing a rebalancng of global balance of trade in his second term – to construct a new tariff program by using the International Economic Emergency Powers Act, known as “IEEPA,” which unilaterally authorizes a president to manage imports during a national emergency.

Trump, one of the sources noted, has a fondness for the law, since it grants wide-ranging jurisdiction over how tariffs are implemented without strict requirements to prove the tariffs are needed on national security grounds.

“Nothing is off the table,” said a second source familiar with the matter, acknowledging the robust discussion over declaring a national emergency that has taken place.

Of course, none of this is actually news! But sadly algos have a 15 millisecond memory so it all sounds exciting and grandiose to them. In 2019, Trump used IEEPA to threaten a 5% tariff on all Mexican imports that would rise to 25% if Mexico declined to take action to reduce the number of undocumented immigrants crossing the border with the United States. After Mexican officials traveled to Washington for a week of in-person negotiations – and an agreement was reached to reinstate the “Remain in Mexico” immigration policy – the tariffs were never implemented. But the specter of the potential action, predicated by a national emergency Trump had declared on the southern border three months earlier, led prominent business lobbying groups like the Chamber of Commerce and the Business Roundtable to prepare lawsuits challenging the legality of such a move.

Trump’s advisers are evaluating the possibility of using section 338 of US trade law, which allows a president to impose “new or additional duties” against countries deemed to be discriminating against the commerce of the United States. In those cases, trade law permits the president to impose new tariffs in direct reciprocation against those countries in specific product categories – though it’s been untested in recent history.

They’re also considering revisiting the trade law – known as section 301 – that ushered in Trump’s initial tariffs on China on national security grounds. The Biden administration left the vast majority of Trump’s tariffs in place – and increased tariffs on certain products like electric vehicles – providing a basis for the incoming president to increase or adjust the tariffs as he sees fit. But implementing tariffs under this statute requires a government investigation, and companies affected by the changes often lobby for months to be excluded from the levies.

More importantly, no final decision has been made on whether to declare a national emergency, sources told CNN. Trump’s team is still exploring other legal avenues to buttress the tariffs that Trump pitched on the campaign trail.

“I think the president has broad authority to impose tariffs for a variety of reasons, and there are a number of statutory bases to do so,” said Kelly Ann Shaw, a trade attorney who served as Trump’s deputy assistant for international economic affairs. “IEEPA is certainly one of them.”

In other words, this is just one camp of anon sources – those who are long the USD – firing back at those who were short the USD ahead of the WaPo fake news report seeking to send the dollar plunging (which they did). And sure enough, the dollar has soared in the immediate aftermath of the WaPo report, with the BBDXY surging 0.6% with cable leading losses; GBP/USD down as much as 1.2% to 1.2334, lowest since April, while UK bond yields rise…

… EUR/USD dropped 0.7% to 1.0273, eyes eyeing the 1.0223 Jan. 2 low…

… while the USD/JPY up 0.3% to 158.55, highest since July; and on the verge of sparking the next round of BOJ intervention.

Ultimately, expect everything to revert to normal as FX traders recall that this kinda of verbal rollercoasters were all the rage for 4 years during Trump’s first admin, only for the new generation of traders and algos, all of this seems so new and exciting, they can’t help themselves but to overtrade on the flashing red headline.

 

 

Victor Davis Hanson said on Monday that he thinks the FBI is “afraid” of the incoming Trump administration over the possibility that their shady dealings will be ‘re-examined.’

Speaking with Fox News on Monday about new evidence released of a suspect in the DC pipe bomb case, the Hoover Institution Senior Fellow told host Laura Ingraham;

“I think they’re afraid the narrative changed over the four years, and they were afraid to release any information during the election. Now they feel that there’s a new administration and there might be some exposure or culpability. They’re afraid that if they were Donald Trump and they had suffered what they did to him, they would be very frightened the way they think,” adding “So they think Donald Trump is going to re-examine a lot of this.”

A new video published by the FBI’s DC Field Office shows a suspect appearing to plant a bomb near the Democratic National Committee.

Hanson went on to call out what he said were the FBI’s “lies,” highlighting the neglect to immediately release Lt. Michael Byrd’s identity after fatally shooting Ashli Babbitt during the Jan. 6 riot. The senior fellow additionally cited the number of charges brought against attendees of the Jan. 6 attack compared to those not charged during the 2020 Black Lives Matter (BLM) riots. –Daily Caller

“A lot of the things they said, Laura, were abject lies,” Hanson continued. “There were not four officers killed. There were not 10 people killed. There was only one violent death, we think, and that was a Trump supporter, Ashli Babbitt. Then there was no need to hide Officer Byrd’s identity. Anytime an officer lethally shoots an unarmed person in this country, they’re identified. For some reason, they wanted to suppress that.”

Watch:

“They wanted to suppress the FBI video. They wanted to suppress the information about Lynn [sic] Cheney, maybe witness tampering, that’s alleged,” Hanson continued. “They wanted to suppress some of the erosion of the evidence. They didn’t tell us how many people were charged. It ended up [with] 1,500 felony charges. It was [an] almost 75% conviction rate. That never happens. Compare that with the 14,000 people that were arrested in 2020. Almost 90% of them were never charged or indicted. They were released. So there was a lot of things that they want to suppress.”

Via Middle East Eye

The Palestinian Authority (PA) asked the United States to approve a four-year $680m plan to boost the training of its special forces and bolster its supply of ammunition and armoured vehicles, an American source and a source close to PA revealed to Middle East Eye.

The request was made in mid-December at a meeting with US security officials at the PA’s Ministry of Interior in Ramallah in the occupied West Bank. At the meeting, PA security officials expressed frustration over what they believed was the US’s failure to fulfil its commitments to the authority by replenishing arms supplies and training special forces.

“Authority officials requested in the meeting that their needs for armored vehicles and ammunition be met urgently in light of the difficulty of the clashes and their inability to resolve the situation in the Jenin camp,” a source told MEE.

They also complained that the US had yet to approve funding for renovation works at prisons in Bethlehem and Nablus in the occupied West Bank.

The meeting came as the PA launched a crackdown on Palestinian fighters belonging to Hamas and Palestinian Islamic Jihad in Jenin. Fighting in the northern West Bank city, long a bastion of Palestinian resistance, has killed at least eight people, according to local media reports.

One former US intelligence official told MEE that the PA’s request for additional funding and arms made sense because the US has been pressing the PA for months to ramp up security operations in the occupied West Bank. The PA has been critical of the departing Biden administration’s post-war planning for the destroyed Gaza Strip.

Since the summer, the US has tried to bolster coordination with the PA. A think tank panel staffed by former US officials even presented a plan to bring cooperation with the PA’s security forces under the purview of Centcom, MEE reported previously. 

‘Not a happy relationship’

According to Israeli media reports, the US Security Coordinator (USSC) for Israel and the Palestinian Authority, General Michael Fenzel, met with PA officials and reviewed their planning for the raid on Jenin.

The US has provided security assistance to the PA since the 1990s. After the Second Intifada, it established the USSC to train its security forces. While the Jerusalem office is tied to the US State Department, American intelligence agencies and the Defence Department have the most regular contact with the PA’s forces.

“It’s not a happy relationship,” William Usher, a former CIA officer who was based in Israel, told MEE previously. “And has little depth. It’s been reduced at heart to a security relationship.”

Complicating the PA’s request for US weapons, Israel can veto security assistance to the authority. According to Axios, the US asked Israel to approve the aid package in December. The previous Trump administration downgraded ties to the PA and former US security officials expressed doubts the US president would press Israel to approve the aid when he returns to office in late January. 

Fatah-Hamas rift

The PA was borne out of the Oslo peace talks in the early 1990s. Its leadership comes from the Palestinian Liberation Organization, which waged a decades-long violent struggle against Israel. In return for limited self-governance in the occupied West Bank and Gaza, the PLO recognised Israel’s right to exist and renounced armed resistance.

The PA is dominated by the secular Palestinian party, Fatah. In 2007, fighting broke out between Fatah and Islamist Hamas after the latter swept to power in Palestinian legislative elections the year before. In the end, Hamas consolidated its hold over Gaza and Fatah in the occupied West Bank. Efforts to reconcile the two have failed. 

The PA is largely seen as ineffective, corrupt and an Israeli collaborator among Palestinians in the occupied West Bank. After the PA renounced armed resistance to Israel, it was unable to deliver a political solution and an independent Palestinian state, while Illegal settlements in the occupied West Bank and occupied East Jerusalem have soared.

When the Oslo Accords were signed, roughly 250,000 settlers lived in the occupied West Bank. That number has risen to almost 700,000 today, including in the occupied East Jerusalem, which many envision as the capital of a future Palestinian state.

Israel regularly conducts unilateral raids in the occupied West Bank, including in Area A, which was set up to be strictly under the PA’s control. Israel has built a sprawling system of barriers and a network of checkpoints that Palestinians must pass through in their daily lives, obliterating any semblance of freedom of movement in the territory nominal under the PA’s control.