Market Update - 12/10/2025

The last Fed meeting of the year concludes with its policy statement at 1:00 p.m. CST, followed by the press conference at 1:30 p.m. CST. The market is all but certain about today’s outcome: a rate cut accompanied by hawkish commentary that future cuts are a long way off. That said, anything can happen, and the market will be closely monitoring for any surprises.

One focal point will be the Dot Plot, which will be closely watched for signals about the path of future rate cuts. As of now, the market is pricing in one cut for 2026 (and potentially only one in 2027). Any deviation in the Dot Plot could spark a market reaction. The balancing of risks between inflation and employment will also be a recurring topic in the press conference as the market gauges which side of the mandate the Fed is focused on most. With next week’s employment report being a “jumbo” two-month release due to the government shutdown, the Fed will likely emphasize its lack of fresh data on the labor side.

We can also expect the media to throw Powell some questions about his replacement and the Fed’s future direction after his term ends, but it’s safe to assume Powell will deflect and reiterate the Fed’s broader policy objectives. The dynamic between him and his soon-to-be-announced replacement will be a major driver as we move further into the winter months, with the market anticipating notable policy differences between the two.

As always, we can expect market moves from the moment the statement drops, throughout the press conference, and even a delayed reaction the following day, as we’ve seen with past Fed announcements. Take a peek at pricing ahead of the announcement and assess locking or floating before the fireworks begin. 😊