Good day. The December jobs report should help keep the Federal Reserve on the sidelines when it comes to interest-rate moves. The report released Friday showed the U.S. added jobs for a record 10th straight year, although wage growth stalled. Transcripts released from the Fed's 2014 policy meetings show Fed Chairman Jerome Powell, then a Fed governor, wasn't eager to raise rates from the near-zero level they had been held at since the financial crisis. And after decades of largely stagnant prices, Japanese under 30 have hardly experienced inflation—a scenario the Federal Reserve wants to avoid.

Now on to today’s news and analysis.

The December employment report is likely to keep the Fed comfortable with its make-no-moves posture as officials look for evidence that last year’s slowdown in manufacturing, investment and trade hasn’t spilled into the broader consumer-driven economy, writes WSJ's Nick Timiraos.

• As Jobs Cap 10 Years of Gains, Women Are Workforce Majority

New research from a Federal Reserve economist warns central banks against changing their inflation targets before they have demonstrated they’re capable of hitting their existing targets.

Fed economist Taisuke Nakata, in a brief published by the central bank last week, examines the Bank of Japan’s decision to raise its inflation target from 1% to 2% in 2013 and its subsequent difficulty to boost prices. He identifies three lessons. Read More.

Figuring out the public’s expectations of future inflation—and trying to influence them—is core to any central banker’s work. Yet Japan shows how hard that becomes when many people barely grasp the concept of steadily rising prices. A 20-year-old in Japan today has experienced average inflation of 0.1% over his or her lifetime. No wonder Bank of Japan Gov. Haruhiko Kuroda’s repeated vows to reach 2% inflation haven’t worked out. An extended period of nearly flat prices is the essence of the “Japanification” specter that worries the U.S. and Europe.

Much of the U.S. economy is largely unscathed by two turbulent years of trade war with China, economic indicators show. Yet economic growth is trending near 2% in 2019, well short of the Trump administration’s goal of 3%. The U.S. and China are preparing to sign a first-stage trade accord on Wednesday, easing trade tensions and making the tariffs worth it, in the administration’s view. At the same time, most Chinese imports are still subject to U.S. tariffs, and many trade issues remain the subject of sharp disagreement. Here is a look at the far-reaching impacts of the trade war.

• Washington, Beijing Agree to New Dialogue to Pursue Reforms

Fed payments to the U.S. Treasury declined in 2019 to a decade low, as the central bank’s expenses rose and income declined. The Fed sent about $54.9 billion to the government last year, down from $65.3 billion in 2018, according to preliminary estimates of the central bank’s annual financial statements, released Friday.

The Fed announced who will lead each of the regional Fed Banks' boards of directors in 2020. Many existing chairs are staying on. As for fresh faces, Philadelphia gets Phoebe Haddon, the chancellor at Rutgers University; St. Louis gets Suzanne Sitherwood, leader of Spire; Minneapolis gets Srilata Zaheer of the University of Minnesota; Jim Farrell of Farrell Growth Group gets the chair in Kansas City; and the new Chicago Fed chair is E. Scott Santi of Illinois Tool Works. (Dow Jones Newswires)

As Marc Demane Debih was flown out of Serbia last May, as a prisoner in U.S. custody, he told federal agents on the plane that an “unbelievable” number of people were committing insider trading. And Mr. Demane said he could name names. In at least 19 interviews with federal authorities, and hours of trial testimony in a Manhattan courtroom this week, Mr. Demane—now a cooperating witness for the government—did just that.

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The U.K. Financial Reporting Council said its investigation into the audits of Carillion's financial statements would take longer than expected, highlighting the complexity of its probe into the British construction and services company’s collapse.

10 a.m.: Boston Fed’s Rosengren speaks at Connecticut Business and Industry Association meeting in Hartford
10:30 a.m.: Bank of Canada releases business outlook and consumer expectation surveys
12:40 p.m.: Atlanta Fed’s Bostic speaks on economy and monetary policy to Rotary Club of Atlanta
3 p.m.: Minneapolis Fed’s Kashkari gives opening remarks at education conference

3:30 a.m.: European Central Bank’s Mersch speaks at Bankers Association for Finance and Trade meeting in Frankfurt
8:30 a.m.: U.S. Labor Department releases December CPI
9 a.m.: New York Fed’s Williams speaks at London School of Economics
1 p.m.: Kansas City Fed’s George speaks on economy and monetary policy at her bank

"The job market weakened last month, and that had a lot to do with what is happening in manufacturing," WSJ's Justin Lahart writes. In the December jobs report released Friday, "manufacturing was the weak spot, shedding 12,000 jobs, versus the gain that most economists expected," he adds. "So far, the economy has dealt with the effects of manufacturing’s malaise with little trouble, and that seems likely to continue to be the case. Indeed, there have arguably been some benefits, with weakness in manufacturing helping to mitigate the effects of a tight job market and keeping wages from running too hot. Still, things would look a lot better if the sector was doing well."

• U.S. manufacturers are paying relocation costs and bonuses to move new hires across the country at a time of record-low unemployment and intense competition for skilled workers.
• Farmers are harvesting more corn and soybeans than expected, lifting prospects for a sector hurt by bad weather and trade tensions.
• Ford's China sales fell for the third year in a row in 2019, a drop to less than half of what it sold at its zenith in 2016, and the company said the situation for the broader market is likely to get worse in 2020.
• Oil prices finished their largest weekly drop in nearly six months Friday despite recent tensions between the U.S. and Iran, underscoring bets that geopolitics in the Middle East won’t disrupt the world’s crude supplies and threaten the world economy.
• Energy activity in the middle of the U.S. fell further in the fourth quarter, according to the Kansas City Fed, which said its quarterly index of drilling and business activity fell to minus 48 from a third-quarter reading of minus 23. (Dow Jones Newswires)
• Canada added jobs in December and the unemployment rate fell, marking a welcome reprieve for an economy that data indicate was in danger of stalling to end 2019.
• Mexico’s industrial production rose 0.8% in November on a seasonally adjusted basis from October with increases in manufacturing, mining and construction, but was down 2.1% from a year earlier, pointing, according to Citibanamex, to a 1.7% contraction for all of 2019. (Dow Jones Newswires)
• Chile’s economy is expected to have contracted by 1% in December, according to a survey by the country’s central bank, after shrinking by more than 3% in both of the previous two months due to large, nationwide protests over inequality, low pensions and other social issues. (Dow Jones Newswires)

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