U.S. markets (S&P 500) ended the holiday-shortened week at new record highs.

Minutes from the Fed’s most recent meeting revealed a general sense of uncertainty surrounding inflation.  Uncertainty as to why inflation has remained so low, and uncertainty as to when it might ultimately reach the Fed’s 2% target. Those sentiments were echoed by Chair Janet Yellen on Tuesday when she said it was a “mystery” as to why inflation has not risen above current levels. While it is clear that the Fed is perplexed, markets continue to expect another rate hike in December as current expectations stand above 90%. On a related note, according to Merrill Lynch, TIPS saw their third-largest inflows on record last week suggesting that investors expect inflation to move higher, not lower, from current levels.

Separately, Yellen officially tendered her resignation from the Fed’s board, effective when Jerome Powell is confirmed.  Powell will be before the Senate Banking Committee on Tuesday as part of his nomination process.

Congress returns to work this week, facing a very busy schedule. With just 12 scheduled legislative days remaining before year-end, the Senate is hoping to pass a tax bill, perhaps as early as this week, while the full Congress must reach a budget deal by December 8 to avoid a government shutdown. In addition, there are a number of other spending bills that Congress will be considering, including one to provide additional aid to hurricane-ravaged areas and another to reauthorize the Children’s Health Insurance Program, which expired at the end of September.

Worth noting, China’s Shanghai Composite index fell -2.3% at the end of the week. In the run-up to this year’s National Congress, regulators had allowed the country’s shadow-banking system to continue to expand. Now, however, they are cracking down on the industry along with other, riskier forms of financing. While that likely won’t impact the overall economy, at the margin, it could raise some concern about economic growth for the world’s second largest economy.

Oil markets will be closely watching OPEC’s meeting this week. Expectations are that the cartel will extend its current production cuts by an additional six to nine months, which could lead to increased upward pressure on oil prices.