Senate & White House in Most Serious Political Crisis of President Trump’s Second Term
Latest Minnesota killing changing GOP plans | Year-round E15 | SDRP2 | Dollar lower, gold tops $5,000/ounce, yen rallies on intervention talk
| LINKS |
Link: The Week Ahead, Jan. 25
Link: Weekend Updates, Jan. 24: Senate Dems Threaten to Block
Homeland Security Funding Over Minneapolis ICE Shooting
Link: Video: Wiesemeyer’s Perspectives, Jan. 23
Link: Audio: Wiesemeyer’s Perspectives, Jan. 23
| Updates: Policy/News/Markets, Jan. 26, 2026 |
| UP FRONT |
TOP STORIES
— Schumer pushes bipartisan action on remaining spending bills — but DHS fight looms large
Democrats urge passage of five remaining appropriations bills while threatening to block DHS funding unless ICE reforms follow two fatal shootings in Minneapolis, raising shutdown risk.
— GOP unease grows after Minneapolis killing tests Trump’s immigration push
Some Republicans call for investigations into ICE conduct after Alex Pretti’s death, exposing GOP divisions as DHS funding and a shutdown deadline collide.
— WSJ editorial calls for ICE pause after Minneapolis shooting
The Wall Street Journal urges President Trump to pause ICE operations in Minneapolis, narrow enforcement, and de-escalate rhetoric after what it calls a moral and political failure.
— Canada pushes ahead with trade diversification despite Trump tariff threats
Ottawa says it will continue expanding trade ties with India and others despite Trump’s warning of 100% tariffs tied to China-linked trade concerns.
— India looks to Europe as U.S. tariffs force export pivot
Indian exporters accelerate EU trade talks as Trump’s tariffs disrupt access to the U.S. market, reshaping global trade flows.
— API urges Congress to act after E15 amendment falls out of minibus deal
API and farm-state allies fault process and strategy after House leaders block year-round E15 language from a must-pass spending bill.
— Fueling American Jobs Coalition pushes overhaul of Renewable Fuel Standard
Refiners and union workers call for EPA-led RFS reforms to curb volatile compliance costs and protect refinery jobs.
FINANCIAL MARKETS
— Equities today
Dollar weakness, yen intervention speculation, equity pullbacks, and gold topping $5,000 dominate markets.
— Markets brace for Fed signals as global growth data tests cautious optimism
Investors await Fed guidance amid weak European growth and renewed yen volatility.
— Japan’s Takaichi signals readiness to counter yen speculation
Japan warns it will act against “abnormal” currency moves as yen swings and bond yields spike ahead of elections.
— Gold surges past $5,000 a troy ounce
Bullion hits a record on safe-haven demand, dollar weakness, and geopolitical risk.
— Income growth slows as tariffs and spending strain the U.S. economy
Weak income gains, low savings, and tariff-driven inflation raise doubts about the durability of U.S. growth.
AG MARKETS
— Brazil soybean crushing to hit record in 2026
Abiove lifts processing and export forecasts as biodiesel demand boosts soybean oil use.
FARM POLICY
— SDRP2 formula leaves shallow losses uncovered
Farmers warn USDA’s base-price methodology is denying disaster aid despite steep harvest-price losses.
ENERGY MARKETS & POLICY
— Oil prices extend rally on U.S. supply disruptions, Middle East tensions
Weather-related outages and geopolitics lift crude despite longer-term oversupply concerns.
— U.S. natural gas surges past $6 on Arctic blast
Freeze-driven outages and demand spikes fuel the biggest weekly rally in decades.
— Electricity bills keep climbing — here are the five forces driving costs higher
Aging grids, tariffs, extreme weather, and AI data centers push household power costs sharply higher.
FOOD POLICY & INDUSTRY
— Tyson extends limited operations at Nebraska beef plant as closure looms
Tyson offers a short-term reprieve to some workers amid historic cattle shortages and record beef prices.
WEATHER
— NWS outlook
Heavy snow threatens the Northeast, with light freezing rain across parts of the Mid-Atlantic.
TOP STORIES — Schumer pushes bipartisan action on remaining spending bills — but DHS fight looms largeDemocrats urge passage of remaining appropriations bills ahead of Friday’s deadline while demanding changes to DHS funding following two ICE-related shootings in Minneapolis Senate Democrats, led by Senate Minority Leader Chuck Schumer (D-N.Y.), are calling on Senate Republicans to work with Democrats to pass the remaining appropriations bills before the government funding deadline this Friday — including efforts to rewrite the Department of Homeland Security (DHS) spending measure. Schumer said Republicans should engage with Democrats on these bipartisan funding negotiations to avoid a government shutdown. “This is the best course of action, and the American people are on our side,” Schumer said in a statement urging cooperation on the outstanding appropriations measures. However, the DHS bill specifically has become a flashpoint:• Democratic resistance to DHS funding: In the wake of a deadly shooting in Minneapolis involving a federal immigration enforcement agent, several Senate Democrats, including Schumer, have said they will not support advancing the DHS funding bill unless it includes meaningful reforms and accountability measures related to Immigration and Customs Enforcement (ICE). • Trigger for resistance: The latest fatality — of a 37-year-old Minneapolis resident, Alex Pretti, shot by federal agents during an enforcement operation — comes just weeks after another fatal federal shooting in the same city, intensifying Democratic outrage and fueling demands for changes to how DHS and ICE operate.• Shutdown risk: Because Senate Republicans control 53 seats and generally need 60 votes to overcome a filibuster on major legislation, Democratic opposition to the DHS measure jeopardizes swift Senate passage of the remaining funding package before current funding expires Friday — raising the specter of a partial government shutdown.• Party divisions: While Schumer and other top Democrats emphasize the need for reforms and greater oversight of ICE, some Republicans have defended the DHS funding and the actions of enforcement personnel, framing Democratic tactics as risking a shutdown. Upshot: Schumer’s call for bipartisan action on the five other spending bills comes amid a broader standoff over the DHS appropriations bill — one shaped by recent federal law-enforcement conduct in Minneapolis and ongoing debates in Congress over immigration enforcement policy. — GOP unease grows after Minneapolis killing tests Trump’s immigration pushRepublicans call for investigations as DHS funding fight and shutdown threat collide Congressional Republicans are showing early signs of unease with President Donald Trump’s aggressive immigration crackdown after federal agents shot and killed Alex Pretti, a Minneapolis nurse, during a protest — an episode now roiling Capitol Hill as a government shutdown deadline looms. While GOP leaders have largely backed Trump’s deployment of federal agents and the National Guard to U.S. cities, the Minneapolis killing has prompted calls for investigations from several Republicans and exposed fissures within the party. Trump told the Wall Street Journal he dislikes “any shooting,” but also criticized protesters who carry firearms, even with permits. On Capitol Hill, Rep. James Comer (R-Ky.) suggested the administration consider shifting operations to other cities, while Rep. Andrew Garbarino (R-N.Y.), chairman of the House Homeland Security Committee, requested public testimony from top immigration officials, underscoring congressional concern about both public safety and law enforcement conduct. More pointed criticism came from lawmakers who have previously broken with Trump. Sen. Thom Tillis (R-N.C.), Rep. Michael McCaul (R-Texas), and Sen. Bill Cassidy (R-La.) each called for thorough investigations, with Cassidy warning that the credibility of Immigration and Customs Enforcement and the Department of Homeland Security is at stake. Border Patrol Commander Greg Bovino said the agents involved were likely placed on administrative leave. The political fallout is colliding with a high-stakes funding fight. Senate Minority Leader Chuck Schumer (D-N.Y.) has vowed to block a broad spending package unless funding for the Department of Homeland Security is stripped, raising the risk of a partial U.S. government shutdown ahead of the Jan. 30 deadline. Democrats argue DHS funding lacks safeguards after what they describe as a pattern of abuses by Immigration and Customs Enforcement and Border Patrol. Moderate Democrats — including Sen. Catherine Cortez Masto (D-Nev.) and Sen. Jacky Rosen (D-Nev.) — have said they will oppose DHS funding without changes, while Sen. Patty Murray (D-Wash.) urged splitting DHS out of the broader package. Republicans face added pressure as the White House labeled Pretti a “domestic terrorist,” a claim Democrats dispute, citing video evidence. Silence from some GOP leaders — including Senate Majority Leader John Thune (R-S.D.) and House Speaker Mike Johnson (R-La.) — suggests the party is still weighing its response, even as at least one other Minnesotan, Renee Good, was killed in a separate ICE-related incident. The debate has drawn national attention, with Barack Obama and Michelle Obama calling Pretti’s death a “heartbreaking tragedy” and warning it should be a wake-up call about the country’s core values. As snowstorms threaten to slow Senate work and the House has left Washington, lawmakers face narrowing options. Any changes to the spending bill would require the House to return, leaving Republicans caught between defending DHS funding, managing intraparty dissent, and avoiding a shutdown with midterm elections approaching. Note: Any gov’t shutdown would not impact USDA regarding its reports as Congress already approved its FY 2026 appropriations bill and President Trump signed it into law — unless they rely on info from an agency that is affected by a shut down. WSJ Editorial Calls for ICE Pause After Minneapolis ShootingBoard says Alex Pretti’s death reflects enforcement failures and urges Trump to de-escalate tensions The Wall Street Journal editorial board argues that Immigration and Customs Enforcement should temporarily halt operations in Minneapolis following the fatal shooting of Alex Pretti, calling the episode a moral and political failure for the Trump administration. The board recounts that Pretti, a nurse with no criminal record, intervened after a woman was pepper-sprayed by ICE agents, was tackled, disarmed of a legally carried firearm, and then shot while on the ground. It rejects administration claims — including by Stephen Miller and Kristi Noem — that Pretti was a “domestic terrorist,” arguing that his actions warranted arrest, not lethal force. The editorial criticizes ICE training and tactics, warning agents appear either poorly prepared or dangerously on edge amid public opposition. It also faults Minnesota Gov. Tim Walz for encouraging citizens to confront and film agents, which the board says further inflamed tensions. Ultimately, the Journal places responsibility on President Donald Trump, urging him to pause ICE enforcement in the Twin Cities, narrow operations to serious criminals, and adopt a less provocative tone. The board warns that current strategies are backfiring politically, turning immigration — once a Trump strength — into a liability for Republicans heading into 2026. — Canada pushes ahead with trade diversification despite Trump tariff threatsAnand says Ottawa won’t abandon plans to expand ties with India and other partners even as Washington warns over China-linked trade Canada will not retreat from its strategy to diversify trade away from the United States despite fresh tariff threats from President Donald Trump, Canadian Foreign Minister Anita Anand said Sunday. Trump warned over the weekend that he could impose 100% tariffs on Canadian goods if Canada becomes a “drop off port” for Chinese exports, responding to Ottawa’s recent decision to lower tariffs on a limited number of Chinese electric vehicles in exchange for food-related concessions, including canola and beef. Anand stressed in an interview with CBC that Canada is not negotiating a free trade agreement with China, but said diversification is essential to protecting the Canadian economy. “We need to protect and empower the Canadian economy and trade diversification is fundamental to that,” Anand said, adding that Canada plans to double non-U.S. exports over the next decade. As part of that effort, Energy Minister Tim Hodgson is traveling to Goa, India, for an energy conference and meetings with officials from Prime Minister Narendra Modi’s government. Talks are expected to focus on cooperation in critical minerals, uranium, and liquefied natural gas. Prime Minister Mark Carney is also planning a visit to India and a separate trip to Australia in March. Anand emphasized that Canada still values its relationship with the U.S., which remains its largest trading partner. In the first 10 months of last year, the U.S. exported about $280 billion in goods to Canada and imported roughly $322 billion, according to U.S. Commerce Department data. The countries’ auto sectors are deeply integrated — a point underscored by Treasury Secretary Scott Bessent, who warned that Washington cannot allow Canada to become a conduit for low-cost Chinese goods.  Economists say a full-scale tariff rupture would be far more damaging for Canada than the U.S., but view Trump’s threat as unlikely. “If there were 100% tariffs on Canada it would be a disaster,” said Randall Bartlett, deputy chief economist at Desjardins Group, adding that Trump has a history of issuing tariff threats and later backing away. Trump continued to criticize Canada’s China ties on social media Sunday, escalating the rhetoric even as Canadian officials signaled they intend to stay the course on trade diversification. — India looks to Europe as U.S. tariffs force export pivotNew Delhi accelerates EU trade talks as manufacturers scramble to blunt fallout from Trump’s tariff offensive Indian exporters are racing to diversify away from the U.S. market after President Donald Trump unleashed a fresh round of punitive tariffs that has upended trade flows for sectors ranging from steel and chemicals to textiles and consumer goods, according to reporting by the Financial Times. The renewed tariff push — part of the Trump administration’s broader effort to re-shore manufacturing and pressure trading partners — has left Indian manufacturers facing sharply higher costs and reduced competitiveness in what has long been one of their most lucrative export destinations. Industry groups told the Financial Times that orders from U.S. buyers are already slowing, with some firms being asked to absorb tariff costs or renegotiate contracts. In response, New Delhi is accelerating efforts to open alternative markets, with particular focus on concluding a long-delayed free-trade agreement with the European Union. Indian officials see an EU deal as a critical pressure valve that could offset lost U.S. demand by lowering tariffs on Indian exports such as pharmaceuticals, auto components, apparel, and engineering goods. Trade negotiators on both sides have recently signaled renewed momentum, as Brussels also looks to diversify supply chains amid rising geopolitical and trade tensions with Washington and Beijing. An agreement with the EU would provide Indian exporters preferential access to a market nearly as large as the U.S., while helping European companies expand their footprint in one of the world’s fastest-growing major economies. Still, exporters caution that trade deals take time to translate into real relief. Smaller manufacturers, in particular, remain exposed in the near term, with limited ability to shift production or redirect shipments quickly. Many are calling on the Indian government to expand export incentives, provide temporary tax relief, or step up credit support to help firms weather the disruption. Upshot: The scramble underscores how Trump’s latest trade blitz is reshaping global commerce, forcing emerging-market exporters like India to rethink long-standing assumptions about access to the U.S. market — and accelerating a broader reordering of trade relationships toward Europe, Asia, and the Global South. — API urges Congress to act after E15 amendment falls out of minibus dealFarm-state lawmakers and biofuel groups fault process and strategy as leadership avoids policy fights in must-pass spending bill The American Petroleum Institute (API) is pressing Congress to move quickly on year-round E15 after an amendment allowing permanent sales of the higher-ethanol blend failed to make it into a minibus spending package that cleared the House last week — a setback that reignited tensions between corn growers, biofuel producers, refiners, and GOP leadership. In a statement, API Vice President of Downstream Policy Will Hupman said the group had worked with lawmakers and a broad coalition to reach an “agreed-upon solution” covering both year-round E15 and reforms to the small refinery exemption (SRE) program. But House leaders ultimately left the policy language out of the spending bill, extending uncertainty for fuel markets and setting the stage for renewed legislative brinkmanship. Why the E15 deal collapsed. According to lawmakers and industry sources, the breakdown was less about opposition to E15 itself and more about how the provision was pursued. House GOP leaders were reluctant to attach a politically sensitive energy policy change to a must-pass appropriations vehicle, particularly one needed to avert a partial government shutdown. Leadership has increasingly tried to keep spending bills “clean,” avoiding controversial riders that could complicate passage in the Senate or invite Democratic defections. That caution proved decisive even though API, major ethanol groups, corn growers, fuel retailers, and several farm-state lawmakers believed they had a workable compromise in hand. Smaller refining interests, however, continued to raise concerns about compliance costs and liability exposure, giving leadership another reason to steer clear of the fight inside an appropriations bill (see next item). Strategic missteps fuel frustration. The episode has also triggered finger-pointing within the biofuel and farm coalition. Some corn-state advocates argue the industry overestimated the willingness of GOP leaders to green-light policy changes through a minibus, especially after leadership signaled a preference for handling E15 in standalone legislation or a broader energy package. Others privately fault the strategy of leaning heavily on oil-industry backing — including API — without locking down firm commitments from leadership and appropriators first. While API’s support was notable and unusual, it ultimately wasn’t enough to overcome procedural resistance at the top of the House GOP. What happens next. Despite the setback, most stakeholders stress that year-round E15 is not dead. Leadership has pointed to alternative paths, including:• Standalone E15 legislation negotiated through regular order• A broader energy or tax vehicle later this year• Inclusion in a likely coming supplemental spending bill that is expected to include additional farmer and ag disaster aid • Work through a newly announced E15 council framework aimed at narrowing remaining disputes API, for its part, is urging Congress to act quickly, warning that prolonged uncertainty could disrupt fuel markets and undermine investments in both refining and biofuels infrastructure. For corn growers and ethanol producers, the failed amendment was a sharp reminder that process matters as much as policy — and that winning the substance of E15 may still require a different legislative lane than the spending bills lawmakers rely on to keep the government open. — Fueling American Jobs Coalition pushes overhaul of Renewable Fuel StandardRefiners and union workers argue EPA reforms are needed to protect refinery jobs, stabilize fuel markets, and curb volatile compliance costs The Fueling American Jobs Coalition (FAJC) — a group representing union workers and independent U.S. oil refiners — is calling for what it describes as commonsense reforms to the Renewable Fuel Standard (RFS), arguing the current program threatens refinery jobs, fuel affordability, and energy security. FAJC says its core mission is to protect working-class refinery jobs while supporting a secure and sustainable domestic energy system. The coalition contends that updating the decades-old RFS would strengthen U.S. competitiveness, improve national security, and reduce fuel supply disruptions and price volatility for consumers. The group points to 2020 as a warning sign: a collapse in fuel demand during the pandemic, combined with volatile RFS compliance costs, contributed to the closure of eight refineries and the loss of thousands of jobs. While U.S. refining capacity has grown modestly since then, FAJC notes it remains roughly 500,000 barrels per day below 2019 levels, leaving independent refiners vulnerable to future shocks. Proposed reforms. FAJC argues that the Environmental Protection Agency has several tools available to stabilize the RFS and lower compliance costs, including:• Lowering RIN prices by creating a fixed-price, government-issued RIN option, reducing market volatility.• Aligning renewable volume obligations with projected travel demand to avoid cost spikes when mandates exceed fuel consumption.• Changing the point of obligation so compliance responsibility falls on fuel blenders rather than refiners without blending capacity.• Allowing RINs tied to exported biofuels to count toward compliance, increasing market liquidity and supporting exports.• Setting biofuel targets compatible with all vehicles and infrastructure to reduce excessive RIN demand.• Establishing safety valves to prevent runaway compliance costs that threaten refinery operations.• Granting waivers to states disproportionately harmed by high renewable volume requirements. FAJC frames the effort as a labor- and consumer-focused push, arguing that reforming the RFS would ensure U.S. energy policy better serves workers, families, and communities while preserving a resilient domestic refining sector. |
| FINANCIAL MARKETS |
— Equities today: The dollar extended its selloff on Monday as speculation swirled that the U.S. could coordinate intervention with Japanese authorities to support the yen. Stocks pulled back, while gold topped $5,000 an ounce.
— Markets brace for Fed signals as global growth data tests cautious optimism
Yen volatility adds to global uncertainty as central banks stick with wait-and-see stance
Global markets head into the week focused squarely on the U.S. policy outlook, with the Federal Reserve set to hold its Jan. 27-28 meeting. Policymakers are widely expected to leave interest rates unchanged at 3.50%–3.75%, reinforcing a patient stance as inflation remains elevated but stable and economic growth continues to run above its long-term trend. Investors will closely parse Chair Jerome Powell’s press conference for signals on tariff-linked inflation, labor-market conditions, and the timing of any future rate cuts.
In Europe, markets will digest first estimates of fourth-quarter GDP from Germany, France, Italy, and the broader Eurozone. Growth is expected to remain weak but positive following a sluggish 2025, while business-confidence indicators are unlikely to show much improvement amid lingering trade frictions and political tension.
Asia-Pacific developments add another layer of complexity. Australian inflation data will be closely watched ahead of the Reserve Bank of Australia’s next meeting, while Japan delivers a dense run of inflation, employment, and industrial production reports. The Japanese yen remains a focal point for global investors, having stayed under pressure amid wide interest-rate differentials and uncertainty over the pace of policy normalization by the Bank of Japan (see next item). Any signs of firmer domestic inflation or wage growth could fuel renewed speculation about tighter policy — and sharper yen moves — with spillover effects for global equity, bond, and currency markets.
Overall, the global picture continues to point to cautious stability rather than acceleration. Central banks are largely in wait-and-see mode, balancing easing inflation against uneven growth and trade disruptions tied to U.S. tariff policy. Markets are likely to remain especially sensitive to central-bank messaging this week, with yen volatility adding to cross-market risk as policymakers look for clearer evidence that inflation is moving sustainably toward target levels.
— Japan’s Takaichi signals readiness to counter yen speculation
Japan warns markets it will act against “abnormal” moves as currency volatility and bond yields surge
Japanese Prime Minister Sanae Takaichi issued a fresh warning to financial markets, saying her government stands ready to take action against speculative and “highly abnormal” market movements as the yen weakens and government bond yields jump.
Speaking during a televised debate, Takaichi said it was not the government’s role to dictate market outcomes but stressed that authorities would deploy “all necessary measures” if volatility becomes excessive. She did not specify whether her remarks were aimed at the foreign-exchange market, the bond market, or both, though officials have recently intensified verbal warnings on each front.
The comments come amid mounting speculation that Japan may be preparing to intervene in currency markets to stem the yen’s slide — potentially with rare coordination from the United States. The yen briefly weakened past 159 per dollar before staging a sharp reversal, rallying as much as 1.75% in its strongest one-day gain since August.
The rebound followed remarks from Kazuo Ueda, governor of the Bank of Japan, and coincided with reports that the Federal Reserve Bank of New York contacted financial institutions to inquire about yen trading — a move traders interpreted as a possible precursor to intervention.
Japan’s top currency official, Atsushi Mimura, declined to comment on whether authorities had conducted a “rate check,” a traditional signal that officials are prepared to step into markets directly. Such checks preceded Japan’s large-scale yen-buying operations in 2024, when authorities spent nearly $100 billion defending the currency as it weakened beyond 160 per dollar. That level is now widely viewed by markets as a rough threshold for renewed action.
The renewed volatility comes as Japan heads toward a snap election on Feb. 8. Takaichi’s pledge to cut food taxes has rattled bond investors, pushing long-dated Japanese government bond yields to record highs earlier in the week before they pulled back.
— Gold surges past $5,000 a troy ounce
Bullion extends rally after biggest weekly gain since 2008 financial crisis
Gold bullion climbed past the $5,000 per troy ounce mark for the first time ever, extending a powerful rally sparked by rising geopolitical uncertainty, investor demand for safe-haven assets, and a weakening U.S. dollar. The metal traded above $5,085.7 on Monday as markets opened this week, building on what analysts describe as its largest weekly gain since the 2008 financial crisis.
According to Financial Times reporting, gold’s ascent to this record level caps a 44% rise over the past year, making it one of the top-performing major asset classes globally. The rally has been driven by sustained inflows into precious metals, broad risk aversion among investors, and central bank buying.
Market participants note that a softer dollar — partly due to expectations of future interest rate moves and heightened fiscal uncertainty — has made bullion more attractive in currencies other than the U.S. dollar, further underpinning demand.
The Financial Times highlights that this milestone underscores increased risk-off positioning in global markets, with precious metals benefiting from heightened geopolitical and economic concerns.
— Income growth slows as tariffs and spending strain the U.S. economy
Weak disposable income gains, low savings, and persistent price pressures cloud the 2026 outlook
A delayed U.S. personal income and spending report is flashing warning signs that economic growth is running well below the pace suggested by recent headline GDP figures, according to Michael Drury, Chief Economist at McVean Trading & Investments, in his Weekly Economic Update dated Jan. 23, 2026.
Drury notes that while third-quarter real GDP growth was reported at 4.4% and Atlanta Fed GDPNow estimates put fourth-quarter growth above 5%, underlying income trends tell a far weaker story. Over the past three months, personal income grew at a 3.1% annual rate, while disposable income rose just 2.6% as taxes increased sharply. Despite that, consumer spending climbed at a 5.0% annual rate, pushing the savings rate down to 3.5% — its lowest level since 2008 outside the brief Covid dip.
The disconnect raises questions about the durability of the so-called K-shaped economy. Drury highlights that nonfarm proprietors’ income was flat in the most recent data and has risen only 2.7% annualized over three months, while asset-based income such as dividends, interest, and rent increased an even weaker 2.1%. With income growth for higher-earning households barely keeping pace with inflation, he questions how long elevated spending can persist.
On inflation, Drury argues that tariff-related price pressures are likely to remain persistent into early 2026. Businesses that initially absorbed higher costs are increasingly passing them on to consumers, even as a weaker dollar against the euro has squeezed margins and forced discounting abroad. He estimates current tariff collections amount to roughly a $250 billion annual tax increase — about 0.8% of GDP — which is manageable for now but could grow if tariffs expand further in coming years.
Labor market signals are also mixed. Soft data from the Conference Board’s “Jobs Hard to Get” index jumped to levels historically consistent with 5% unemployment, even as the official unemployment rate edged slightly lower. Meanwhile, continuing jobless claims and temporary staffing indicators stabilized and turned higher in late 2025, suggesting the labor market may be losing momentum without yet tipping into recession.
Looking longer term, Drury cautions that echoes of the early-2000s period — marked by weaker growth, global competition, and rising deficits — are visible again. He argues that a widening K-shaped economy driven by innovation, investment, and productivity gains would be preferable to an outcome dominated by defense-led deficit spending, even if inequality remains politically uncomfortable.
| AG MARKETS |
— Brazil soybean crushing to hit record in 2026 as biodiesel demand lifts oil use
Abiove lifts processing, export, and revenue forecasts, though analysts warn shipments may slow later in the year
Brazil’s soybean crushing industry is on track to set a new record in 2026, with processing projected at 61 million tonnes, according to updated forecasts from Abiove. The revised outlook marks a 0.8% increase from the prior estimate and a 4.3% gain from 2025 levels, underscoring continued expansion in domestic value-added processing.
Byproducts are also set to rise. Soybean meal output is now seen at 47 million tonnes (up 0.9% from the last forecast), while soybean oil production is projected at 12.25 million tonnes, both roughly 4%–5% higher year over year. Abiove said stronger crushing reflects efforts to add value domestically while meeting protein and energy demand at home and abroad.
Demand fundamentals remain supportive, particularly for soybean oil amid Brazil’s biodiesel mandate. Analysts note that higher blending has bolstered crusher margins through oil, while expanding meal supplies could ease prices and stimulate consumption.
Abiove also lifted its soybean export forecast for 2026 by 0.5% to 111.5 million tonnes, implying 3.1% growth from 2025. Exports of soybean oil were raised sharply — up 11.5% to 1.45 million tonnes — while meal exports were left unchanged at 24.6 million tonnes, still up 5.6% year over year.
Not everyone shares the bullish view. Some analysts caution that while China should remain a key buyer, overlapping supply agreements with the U.S. could slow shipments in the second half, potentially pulling exports closer to 107 million tonnes.
Higher volumes and firmer prices are expected to lift soy complex export revenues to $57.28 billion in 2026, an 8.3% increase from 2025. Abiove projects average soybean export prices at $425 per tonne (+5.6%), meal at $335 per tonne (–1.4%), and oil at $1,140 per tonne (+7.3%).
Despite stronger domestic use, ending stocks are forecast to rise to 9.2 million tonnes by end-2026 — about 30% higher than a year earlier — highlighting ample supply even as Brazil’s crushing sector reaches new highs.
| FARM POLICY |
— SDRP2 formula leaves shallow losses uncovered for wheat and other farmers facing historic downturn
Eastern Oregon producer says use of base/spring price — instead of harvest price — erased critical disaster aid and exposes a structural flaw affecting row-crop farms nationwide
Jeff Newtson doesn’t need a spreadsheet to tell him how bad the farm economy has become — he can see it from his shop door. A dryland wheat and canola farmer outside Helix, Oregon, Newtson farms with his wife, son, and daughter-in-law on ground first homesteaded by his great-grandfather in 1887. In three decades of farming, he says the current downturn is unlike anything he has experienced. Within 10 miles of his operation, five century farms have shut down in recent years, including a cousin’s family farm that had operated alongside his since the 1890s.
Despite the losses, Newtson remains determined to keep the operation going, crediting the work ethic and fresh ideas of the next generation.
But a recent experience with USDA’s Supplemental Disaster Relief Program (SDRP) has underscored how precarious survival has become.
A sharp break between SDRP1 and SDRP2. Newtson qualified for a Stage 1 SDRP payment for the 2023 crop year due to drought-related losses. That payment mirrored the familiar crop insurance framework — revenue was calculated using the same methodology as Risk Management Agency (RMA) indemnities, including harvest prices.
Stage 2 was different. Under SDRP2, USDA calculates “total income” using the base price established at the beginning of the insurance year, rather than the harvest price or the actual price received by the farmer. For Newtson’s wheat, the base price used was $7.86 per bushel — far above the RMA harvest price of $5.73 and well above the sub-$5 prices his farm actually received.
That single methodological change eliminated an estimated $125,000 payment for his operation — money he says is urgently needed this year.
Regulatory language drives the outcome. The discrepancy stems directly from how the program is written in federal regulation.
Stage 1 payments reference calculations “consistent with the calculation of an indemnity for the crop and unit,” effectively tying SDRP1 to established crop insurance formulas.
Stage 2, however, relies on different statutory language, specifying that the price used is “the price used by RMA to calculate the liability” — which is the base price, not the harvest price.
As a result, SDRP2 can show little to no “shallow loss” even when farmers experience substantial revenue declines at harvest.
Farm organizations have warned that this structure systematically understates real-world losses. A recent Farm Bureau analysis (link) concluded that the SDRP shallow loss formula “fails to reflect market conditions at harvest,” particularly during periods of rapid price deterioration.
A nationwide issue, not a one-farm problem. Newtson emphasizes that this is not just a Pacific Northwest wheat issue. Because SDRP2 relies on base prices across crops, many row-crop farmers nationwide face the same problem — qualifying on paper for little or no assistance despite deep margin compression.
“This is probably something that can’t be fixed without Congress,” Newtson said. “But it effectively means shallow losses won’t be compensated for most producers.”
He has already raised the issue with his local Farm Service Agency office and his state wheat organization, which plans to elevate concerns to the National Association of Wheat Growers. He also notes that farm policy experts have indicated that lawmakers are aware of the problem and exploring potential changes.
For now, though, the gap remains — and for operations already strained by low prices, high costs, and tightening credit, the difference between base price and harvest price is no longer academic.
“It’s the difference between surviving another year and losing another century farm,” Newtson said.
| ENERGY MARKETS & POLICY |
— Monday: Oil prices extend rally on U.S. supply disruptions, Middle East tensions
Crude benchmarks climb to multi-week highs as winter storm outages and rising geopolitical risk offset longer-term oversupply concerns
Oil prices edged higher Monday, building on last week’s gains as temporary U.S. production disruptions and renewed Middle East tensions added a risk premium to markets.
Brent crude rose 42 cents, 0.7%, to $66.30 a barrel, while U.S. West Texas Intermediate climbed 42 cents, 0.7%, to $61.49. Both benchmarks ended last week up about 2.7%, their highest closes since mid-January.
Analysts pointed to harsh winter weather as a key driver. Winter storm Fern forced shut-ins across major U.S. oil and gas regions, tightening near-term physical supply and straining power grids. JPMorgan estimated that roughly 250,000 barrels per day of U.S. crude production has been temporarily knocked offline, including declines in the Bakken and parts of Texas.
Geopolitics also remain a key support. Rising tensions between the U.S. and Iran have kept traders cautious after President Donald Trump signaled that a U.S. carrier strike group and other assets are heading toward the region. An Iranian official warned Friday that any attack would be treated as an all-out war. The developments have reignited supply-disruption fears and lifted risk premiums.
Elsewhere, some supply pressure eased after the Caspian Pipeline Consortium said it restored full loading capacity at its Black Sea terminal following maintenance, helping normalize exports from Kazakhstan.
Overall, traders see near-term price support from weather-related outages and geopolitical risk, even as longer-term concerns persist about ample global supply later in 2026.
— U.S. natural gas surges past $6 on Arctic blast
Freezing temperatures knock out production, strain power grids, and drive the biggest weekly rally in decades
U.S. natural gas futures climbed above $6 per million British thermal units for the first time since late 2022, as an Arctic blast swept across much of the country, sharply increasing heating demand while disrupting supply.
February futures surged as much as 19% in early Asian trading Monday to $6.288, extending a powerful rally that followed a roughly 70% gain last week — the largest weekly advance in records dating back to 1990, according to Bloomberg.
The winter storm is estimated to have knocked nearly 10% of U.S. natural gas production offline just as demand from homes, businesses, and power plants spiked. The deep freeze has strained electricity grids, disrupted transportation networks, and grounded thousands of flights nationwide.
The largest U.S. grid operator is urging power plants to secure adequate natural gas supplies through the week, warning that frigid temperatures could push electricity demand to a winter record. At the same time, gas flows to U.S. liquefied natural gas export facilities have fallen to their lowest level in a year as storm-related disruptions curtail output.
Market structure is also amplifying the price move. The February contract expires Wednesday, leaving liquidity thin, with open interest below 25,000 contracts compared with roughly 340,000 contracts in the March futures. The March contract climbed as much as 11% to about $3.997 per million Btu.
Natural gas prices are now at their highest level since December 2022, when European demand for U.S. LNG surged after Russia’s invasion of Ukraine cut off much of Europe’s pipeline gas supply.
— Electricity bills keep climbing — here are the five forces driving costs higher
From aging power lines to A.I. data centers, mounting pressures on the U.S. grid are pushing household electricity costs sharply upward
Electricity bills are rising far faster than inflation — and for many households, the increases are becoming painful. According to Time magazine, the average monthly residential electricity bill climbed from about $121 in 2021 to roughly $156 in 2025, a nearly 30% jump. Bills rose another 12.7% just between January and October last year, and costs are projected to keep climbing as demand surges and infrastructure strains intensify.
Time reports that the average U.S. household is expected to spend close to $1,000 this winter on home heating, while federal heating assistance funding has fallen sharply. An estimated four million households experienced utility shutoffs in 2025, underscoring the growing affordability crisis.
Here are the five main drivers behind today’s higher electricity bills, as outlined by Time:
1. Inflation outpacing incomes
Electricity prices have risen faster than overall inflation since the pandemic. Higher labor, materials, and equipment costs mean utilities are paying more to operate and maintain the grid — expenses that are passed directly to consumers.
2. Aging and fragile infrastructure
Much of the U.S. power grid was built in the 1960s and 1970s, and roughly 70% of transmission lines are now more than 25 years old. Utilities are spending heavily to replace and reinforce aging equipment for safety and reliability, and those upgrade costs show up on customer bills.
3. Tariffs on steel and aluminum
Grid upgrades rely heavily on steel and aluminum, both subject to tariffs originally imposed during the first Trump administration and expanded since. Higher tariffs raise the cost of transmission towers, power plants, and other infrastructure, increasing overall electricity prices.
4. Climate-related grid stress
Extreme weather — including hurricanes, wildfires, and heat waves — is driving up costs. Utilities are investing more in wildfire prevention, storm hardening, and grid resilience. In California alone, wildfire-related spending added roughly 4 cents per kilowatt-hour to annual rates between 2019 and 2024, according to data cited by Time.
5. Explosive growth in data centers
Electricity demand is surging as data centers — many supporting A.I. workloads — multiply across the country. Data centers accounted for about 4% of U.S. electricity use in 2024, and demand is expected to more than double by 2030. Areas near major data center developments have seen electricity costs rise dramatically, sometimes by triple-digit percentages over just a few years.
Upshot: Time notes that while rate increases often reflect decisions made years earlier, the combination of rising demand and long-deferred investment means utilities now have little choice but to raise prices. With electricity consumption climbing for the first time in decades, experts warn that higher bills may be the price of keeping the grid reliable — and that some states will feel the impact more sharply than others due to years of underinvestment.
| WASHINGTON EVENTS OF NOTE THIS WEEK |
Mon., Jan. 26
• Weather closure. U.S. gov’t offices in the Washington, DC, region are closed due to weather which could affect some data releases or events.
• ICE activities. House Homeland Security Committee Democrats forum on “Operation Catahoula Crunch, ICE Invasion of Louisiana,” to “hear firsthand accounts regarding the Trump administration’s terrorizing of our community.”
• Health care costs. Competitive Enterprise Institute holds a virtual briefing on “A Free Market is the Best Medicine.”
Tues., Jan. 27
• President Donald Trump delivers remarks on energy and the economy in Clive, Iowa. Link to Week Ahead for perspective.
• Crypto legislation. Senate Ag Committee markup of the “Digital Commodity Intermediaries Act.”
• CFTC/SEC joint event on crypto. Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) joint event on “SEC/CFTC Harmonization, U.S. Financial Leadership in the Crypto Era.”
• Congressional views on China. Council on Foreign Relations China Strategy Initiative and the University of California San Diego School of Global Policy’s 21st Century China Center discussion on “China and Congress: Is There Still a Bipartisan Consensus?”
• Helicopter/airplane collision near Washington, DC. National Transportation Safety Board (meeting to determine the probable cause of the Jan. 29, 2025, midair collision between a PSA Airlines CRJ700 regional jetliner and a US Army Sikorsky UH-60L Black Hawk helicopter over the Potomac River near Ronald Reagan Washington National Airport.
• Minerals security. Atlantic Council discussion on “Allied Partnership for Minerals Security.”
• AGOA outlook. Center for Strategic and International Studies discussion on “The Future of AGOA (Africa Growth and Opportunity Act): Building American Prosperity Through African Partnership.”
• Transatlantic relations. Quincy Institute for Responsible Statecraft virtual discussion on “Europe and the Crisis in Transatlantic Relations.”
• U.S. mayors’ meeting. United States Conference of Mayors 94th Winter Meeting; runs through Friday.
• Birthright citizenship. Senate Judiciary Constitution Subcommittee hearing on “Protecting American Citizenship: Birthright Citizenship for Illegal Aliens and Tourists.”
• Fraud and state, federal programs. Senate Homeland Security and Governmental Affairs Disaster Management, District of Columbia, and Census Subcommittee hearing on “Examining Fraud in State and Federal Programs.”
• U.S. wildfire policy. Environmental and Energy Study Institute briefing on “Igniting Innovation: Progress and a Path Forward for Wildfire Policy.”
Wed., Jan. 28
• Trump trade policy review. Brookings Institution discussion on “One year of ‘America First’ trade policy: What did we learn, and what comes next?”
• U.S. policy with Venezuela. Senate Foreign Relations Committee hearing on “U.S. Policy Towards Venezuela.”
• Environmental review and permitting. Senate Environment and Public Works Committee hearing on “The Federal Environmental Review and Permitting Processes, Part II.”
• State secretaries of state meeting. National Association of Secretaries of State 2026 Winter Conference; runs through Saturday.
• Foreign Intelligence Surveillance Act. Senate Judiciary Committee hearing on “Review and Reform: The Foreign Intelligence Surveillance Act and Executive Accountability.”
• California wildfires. Senate Homeland Security and Governmental Affairs Investigations Subcommittee hearing on “One Year After Disaster: Experts Weigh in on the Palisades Fire.”
• Fraud in Minnesota, other locations. Senate Judiciary Federal Courts, Oversight, Agency Action and Federal Rights Subcommittee hearing on “Somali Scammers: Fighting Fraud in Minnesota and Beyond.”
• Small business program integrity. Senate Small Business and Entrepreneurship Committee hearing on “From Fraud to Recovery: Restoring Integrity in Small Business Programs.”
Thur., Jan. 29
• WTO situation. Washington International Trade Association virtual discussion on “WTO (World Trade Organization) Matters: Core Functions of the WTO.”
• Geopolitical outlook. Henry L. Stimson Center discussion on “The World, Rewired — A Geopolitical Outlook for 2026 and Beyond.”
• U.S. electricity reliability. R Street Institute virtual discussion on “The U.S. Electric Reliability Outlook and Policy Implications.”
• Cuba outlook. Quincy Institute for Responsible Statecraft virtual discussion on “Is Cuba Next?”
• War in Ukraine. Institute of World Politics discussion on “The War in Ukraine — An Update from the Front.”
Fri., Jan. 30
• Federal Reserve. Fed Vice Chair for Supervision Michelle Bowman delivers virtual remarks on Monetary Policy and Supervision and Regulation at the SW Graduate School of Banking at SMU Cox.
• International space station. National Aeronautics and Space Administration (NASA) mission overview news conference for the SpaceX Crew-12 Mission to the International Space Station.
| FOOD POLICY & FOOD INDUSTRY |
— Tyson extends limited operations at Nebraska beef plant as closure looms
Meatpacker offers short-term reprieve to a small share of workers amid historic cattle shortages and record beef prices
Tyson Foods said Friday it will temporarily continue preparing beef for sale at its Lexington, Nebraska, slaughterhouse even as the facility moves toward closure, providing a brief extension of employment for about 9% of the plant’s workforce.
The company announced in November that it would shut the beef plant around Jan. 20, citing tight U.S. cattle supplies that have sharply raised costs for processors. In a new notice filed with Nebraska officials, Tyson said layoffs began on that date but that roughly 292 of the plant’s 3,200 workers will remain employed for between three and 185 days to carry out closure-related duties. Fewer than half of those workers are expected to remain past the end of January.
“Limited further processing will continue at our Lexington facility during this transition period,” Tyson said in an emailed statement.
U.S. cattle inventories have fallen to their lowest level in nearly 75 years after prolonged drought dried up grazing pastures and forced ranchers to shrink their herds. The supply squeeze, combined with strong consumer demand, pushed retail ground beef prices to a record $6.69 per pound in December — up 19% from a year earlier — according to the Bureau of Labor Statistics.
President Donald Trump said in October he was working to bring down beef prices, but costs for hamburger and steaks have continued to edge higher. While elevated prices can support Tyson’s margins, the company has also been paying record prices to acquire cattle for slaughter.
Nebraska officials have said they hope Tyson will sell the Lexington facility or find an alternative use to limit economic fallout for the community of about 10,000 residents. Tyson noted the Lexington beef complex has operated since 1990.
| WEATHER |
— NWS outlook: Heavy snow over the Northeast… …Light freezing rain over parts of the Mid-Atlantic.
